CFTC Staff Advisory on Extending Trading and Clearing Operations to a 24/7 Basis

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II. Background
In recent years, the Divisions have seen an increased interest in the trading, associated clearing operations, and settlement of financial products on a continuous, or near-continuous basis. The ability to engage in, and maintain, markets on a 24/7 basis has been, in part, paralleled by evolutions in market technologies, such as blockchain networks and decentralized infrastructure, alternate forms of collateral, including stablecoins and crypto assets, and market accessibility through smartphones and associated software applications. With this evolution, an increasing number of platforms, with a growing list of tradeable products, are providing 24/7 access to retail and institutional participants. Historically, U.S. derivatives markets have allowed participants the ability to trade futures and swaps on weekdays, but not on weekends. In practice, many derivative contracts now trade for roughly 23 hours on each weekday, and participants may receive collateral calls once or multiple times on each of those days, but not on Saturdays, Sundays, or certain holidays. In recent years, the interest in, and growth of, 24/7 trading in other financial markets has started to shift to regulated derivatives. Because of inherent differences between underlying markets, switching to 24/7 trading and clearing may not currently be suitable for all asset classes. For example, derivatives referencing crypto assets may be well-suited for 24/7 trading due to their digital infrastructure and global reach, while other derivatives markets, such as in agricultural products, may be less suited for 24/7 trading due to their unique customer bases, regional nature, and the specialized trading and hedging practices in those markets. Given these distinctions, DCMs, SEFs, and DCOs should consider market needs, the trading characteristics of the underlying markets, specific contract features and design, and the potential implications for risk management, clearing, and trading activities when considering a transition to 24/7 trading, clearing, and settlement. Therefore, Commission staff believes that an advisory, outlining the potential risks associated with 24/7 trading, clearing, and settlement, and the ways in which these risks are addressed by current Commission regulations, may help promote continued market robustness, along with responsible innovation and fair competition among market participants. 3 This advisory provides an overview of Commission staff’s current views on extensions of current market activity to a 24/7 basis, and how this thinking may or can depend on the relevant products, operational systems and infrastructure, or eligible collateral types. 3 7 U.S.C. § 5(b).

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III. Trading
Under the CEA and Commission regulations, DCMs and SEFs must comply with Core Principles that are intended to promote market integrity and protect market participants. To satisfy their obligations under the Core Principles, DCMs and SEFs must, among other things, implement risk controls, conduct real-time market monitoring, establish system safeguards, and maintain sufficient compliance staff and resources. Additionally, they are required to prevent manipulation, price distortion, and disruptions of the delivery or cash settlement process through robust market surveillance, compliance, and enforcement (or disciplinary) practices and procedures. A. Settlement Process DMO staff believe DCMs and SEFs should avoid offering contracts that settle during offpeak periods, such as overnight and weekends in the underlying market, which may result in manipulation, disruptions of the settlement process, as well as trading, market, and pricing disruptions or distortions. 4 B. Real-Time Monitoring and Risk Controls DCMs and SEFs are expected to play a key role in addressing conditions that are, or threaten to be, disruptive to its markets. Among other things, DCMs and SEFs are required to have in place surveillance, compliance and enforcement/disciplinary practices and procedures— including methods for conducting real-time monitoring of trading—to monitor trading in derivatives, in order to prevent manipulation, price distortion and disruptions of the delivery or cash-settlement process. 5 DCMs and SEFs also must establish and maintain risk control mechanisms to prevent and reduce the potential risk of market disruptions, including, but not limited to, market restrictions that pause or halt trading under market conditions prescribed by the DCM or SEF, or other additional risk controls as may be needed or appropriate. 6 Further, DCMs and SEFs must maintain robust market surveillance for abusive trading practices, including front-running, wash trading, pre-arranged trading, and any other manipulative or disruptive trading practices prohibited by the CEA. 7 4 See 7 U.S.C. 7(d)(3); 7 U.S.C. 7b-3(f)(3); 17 CFR §§ 37.300-301; and 17 CFR §§ 38.200-201. For example,
Appendix C to Part 38 states “[w]here a [DCM] itself generates the cash settlement price series, the designated
contract market should establish calculation procedures that safeguard against potential attempts to artificially influence the price. For example, if the cash settlement price is derived by the [DCM] based on a survey of cash market sources, the [DCM] should maintain a list of such entities which all should be reputable sources with knowledge of the cash market. In addition, the sample of sources polled should be representative of the cash market, and the poll should be conducted at a time when trading in the cash market is active.” 17 CFR § 38
Appendix C.
5 See 7 U.S.C. 7(d)(4); 7 U.S.C. 7b-3(f)(4); 17 CFR § 37.203; 17 CFR §§ 37.400-401; 17 CFR §§ 38.250-251; 17 CFR § 38.155; and 17 CFR § 38.157. 6 17 CFR § 37.405; 17 CFR § 38.251. 7 17 CFR § 37.200; 17 CFR § 37.203; 17 CFR § 37.401; 17 CFR § 38.150; 17 CFR § 38.152; 17 CFR § 38.155; and 17 CFR § 38.250.

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DMO staff believes that extending trading hours to a 24/7 schedule for certain markets or products could potentially result in reduced liquidity, increased volatility, widened bid/ask spreads, and, as a result, create greater opportunities for market manipulation. As such, when extending trading hours to 24/7 for a particular product or market, DCMs and SEFs must demonstrate that they are able to effectively conduct real-time monitoring and maintain robust market surveillance for abusive trading practices of the product or market that is trading under a 24/7 schedule because of the inherent risks of a thinly traded market. Further, DCMs and SEFs must be able to demonstrate that they have adopted effective risk control mechanisms to prevent and reduce the potential risk of market disruptions that may be present in a 24/7 trading environment.
C. System Safeguards
DCMs and SEFs must ensure reliability and integrity of their trading platforms at all times. 8 In particular, DCMs and SEFs must establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and the development of automated systems that are reliable, secure, and have adequate scalable capacity. 9 Further, DCMs and SEFs must conduct regular, periodic, objective testing and review of their automated systems to ensure that they are reliable, secure, and have adequate scalable capacity. 10 Finally, SEFs and DCMs must maintain businesscontinuity disaster recovery plans that are subject to regular, periodic, objective testing, and review. 11

24/7 trading presents additional challenges for system safeguards, primarily due to the need for uninterrupted reliability and integrity of trading platforms. With markets operating continuously, automated systems must be constantly monitored and regularly tested to ensure they remain secure and scalable under varying loads, including off-peak hours when staffing and oversight may be reduced. As a result, there may be an increased risk of operational failures, cyber threats, and system outages, requiring robust business continuity and disaster recovery plans that can respond swiftly to incidents at any time. In addition to these monitoring and testing obligations, DCMs and SEFs must also address the increased system-design demands created by continuous operations. Core systems should be designed for high availability and resilience, including the elimination of single points of failure, the use of redundant infrastructure, real-time data synchronization, and ongoing validation of component-level availability. DCMs and SEFs should further maintain duplicate or parallel production environments that support rolling upgrades, live cutovers, and back-out procedures, in accordance with generally accepted best practices. 8 See U.S.C. 7(d)(20); 7 U.S.C. 7b-3(f)(14); 17 CFR §§ 37.1400-1401; 17 CFR §§ 38.1050-1051. 9 Id. 10 Id. 11 Id.

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D. Compliance Staffing and Resources
DCMs and SEFs must both establish and maintain adequate compliance staff and resources to conduct effective audit trail reviews, trade practice surveillance, market surveillance, and real-time market monitoring. 12 Compliance teams must be sufficiently resourced not only to handle unusual market or trading events as they arise but also to conduct and complete investigations promptly. 13 DMO staff notes that maintaining adequate real-time surveillance and compliance coverage during overnight and weekend periods may strain resources and complicate the timely identification and mitigation of emerging risks. Further, DCMs and SEFs that use a regulatory service provider must ensure that the provider has the capacity and resources necessary to provide timely and effective regulatory services, including adequate staff and automated surveillance systems. 14 In order to support 24/7 trading, DCMs and SEFs should implement additional compliance measures designed to address the unique challenges associated with expanded trading hours. These measures include increasing compliance staffing and resources to ensure adequate coverage and real-time, continuous monitoring, updating procedures to reflect the demands of continuous operations, and establishing new operational protocols specifically tailored to mitigate risks and maintain market integrity in a 24/7 trading environment.
IV. Clearing
Even where 24/7 markets provide continuous access to trading platforms, associated clearing systems may, or may not, operate on a different schedule. In some instances, clearing operations, and associated processes, overlap with those of the trading platform; collateral calls, and the accompanying movement of collateral from participant to DCO, or between participants, also occurs on a 24/7 basis. In other instances, clearing operations are more closely aligned with traditional market hours, with collateral calls/payments only occurring during weekday sessions. Distinctions between these clearing models, and the resulting risks they may present, are discussed in more detail below. In either case, however, under the CEA, a DCO is required to manage its risks. Similar to DCMs and SEFs, DCOs are subject to Core Principles, which make DCOs responsible not only for risk management generally (see Core Principle D(i)) 15 , but also for more specific requirements covering the setting and collection of margin (which “shall be 12 17 CFR § 37.203; 17 CFR §§ 38.154-155. 13 Id. 14 17 CFR § 37.204; 17 CFR § 38.154. DCMs and SEFs remain responsible for the performance of any regulatory services received, for compliance with their obligations under the Act and Commission regulations, and for the regulatory service provider's performance on its behalf. Id. 15 7 U.S.C. 7a-1(c)(2)(D)(i). “Each [DCO] shall ensure that the [DCO] possesses the ability to manage the risks associated with discharging the responsibilities of the [DCO] through the use of appropriate tools and procedures.”).

6 sufficient to cover potential exposures in normal market conditions,” Core Principle D(iv)) 16, and maintenance of sufficient financial resources to withstand a default (Core Principle B). 17 In evaluating whether extending market access to a 24/7 basis would remain consistent with the CEA and Commission regulations thereunder, DCR staff will consider, among other things, the potential effects of 24/7 trading operations on the DCO’s clearing, margin, settlement arrangements; system safeguards; market-integrity controls; and staffing and governance. DCOs proposing new or amended clearing processes to facilitate 24/7 trading should, where relevant, address the following areas, to inform Staff’s review. A. Clearing, Margining, and Settlement Design As noted above, extended trading hours may or may not be paired with a similar extension of hours for clearing services. Extended trading hours may mean any one of the following for clearing:

Collateral calls continue to only be made during traditional market hours
Participants can opt into posting collateral during weekend hours
Participants are required to post collateral during weekend hours
Current 24/7 trading in U.S. derivatives markets falls in the first of these categories. This approach may reflect operational frictions related to the movement of certain collateral types over the weekend, as well as concerns that imposing collateral calls over the weekend may place undue liquidity demands on market participants. Where collateral continues to be collected only during traditional market hours, a DCO must still demonstrate sufficient financial resources and liquidity to meet obligations continuously, including over multi-day bank closures, as required by the DCO’s Core Principle B obligations (Financial Resources). 18 Given this, DCOs should evaluate the impacts caused by a divergence between trading and clearing frequencies on areas including risk tolerances, stress scenarios, and participant behavior, and explain to the Commission any mitigants implemented to ensure that they are still meeting this core principle (e.g., adjusting the size of the guarantee fund, or to margin calibrations, in response to novel risks posed by weekend trading). Similarly, regulations related to DCO Core Principle D (Risk Management) highlight the need for the DCO to ensure initial margin requirements consider unique risks associated with a given product or portfolio 19—which may speak to the value of, or need for, pre-funding of initial margin, or additional liquidity buffers for initial margin associated with positions entered into 16 7 U.S.C. 7a-1(c)(2)(D)(i). 17 7 U.S.C. 7a-1(c)(2)(B). 18 Id. 19 Specifically, Commission Regulation 39.13(g)(2)(i) states that “[a DCO] shall have initial margin requirements that are commensurate with the risks of each product and portfolio, including any unusual characteristics of, or risk associated with, particular products or portfolios.” 17 CFR § 39.13(g)(2)(i).

7 during extended hours. In addition, margin calibrations may need to be adjusted to ensure appropriate coverage given weekend trading would encompass multiple days. 20 These risks may be mitigated or enhanced depending on the characteristics of the underlying market: liquidity risks may be lower for product classes where 24/7 spot markets are already well established, or higher for product classes where participation is dominated by participants who have limited operational capabilities for weekend trading. Other risk management considerations, and associated mitigants, can arise in the second and third categories above, when collateral is actually exchanged over the weekend, either on an optional or required basis. In models of this type, as with all other models, the DCO must continue to ensure that eligible collateral remains restricted to “those that have minimal credit, market, and liquidity risks.”21 Because certain traditional forms of collateral (e.g., cash) are less widely available over the weekend, the DCO may need to consider, and quantify, changes in credit, market, and liquidity risks during this period. For specific collateral types, such as stablecoins and other crypto assets, distinctions between the risks of weekend and weekday collection and transfer may be less acute. However, other risks may be relevant and in need of analysis for these more innovative classes of collateral. 22 More generally, factors that may need to be considered in models with weekend collateral exchange could include:

Operational structures that allow for timely and reliable collateral movement;
The ability, when needed, to readily convert between collateral types;
Exposure monitoring during trading periods with participant and liquidity profiles
distinct from that of weekday trading; and
Distinct default management procedures that address weekend risks.
The importance, and complexity, of these factors may depend on the set of market participants for whom they are relevant. For example, in a case where weekend collateral transfer is optional, operational, legal, and default risks may only be applicable to specific participant or product classes. In some cases, weekend clearing models, especially those where all market participants are required to participate in weekend collateral posting and transfer, may be neither prudent nor viable. This may be especially true for markets where trading of the product is highly concentrated in specific geographical regions or hours of the day (e.g., U.S. regional markets like 20 17 CFR § 39.13(g)(2)(ii). 21 17 CFR § 39.13(g)(10). 22 For a discussion of potential factors associated, see CFTC staff’s recent guidance on tokenized collateral, CFTC Letter No. 25-39 (Dec. 8, 2025).

8 agriculture or livestock), or where operational or liquidity costs of weekend collateral are especially high for market participants (e.g., traditional end users). B. Other Risk Considerations Other DCO Core Principles may be implicated depending on the clearing model used in connection with 24/7 trading. For example, extending current systems to weekend hours, or needing to introduce new systems, may pose unique operational risks. When this is the case, DCOs must demonstrate a comprehensive program of risk monitoring and oversight that addresses: (1) information and operational security; (2) business continuity and disaster recovery planning and resources; (3) capacity and performance planning; (4) systems operations; (5) systems development and quality assurance; and (6) physical/environmental security. 23 Other areas that DCOs may need to consider and demonstrate consistency with the CEA could include:

Revised Enterprise Technology Risk Assessments, including changes to vulnerability
management, penetration testing, operational security, and change-management governance given continuous operations and the potential use of technology like blockchain networks or distributed ledgers for tokenized collateral;
Updated procedures for notice filings related to material system impairments or business
continuity and disaster recovery activation that occur during weekend hours; and
Staffing coverage plans across operations, risk management, compliance, surveillance,
cybersecurity, and incident response, as well as vendor/service-provider coverage for critical dependencies (e.g., cloud/hosting, network, and market-support services).
V. Rule Changes to Adopt 24/7 Trading and/or Clearing (Part 40)
Pursuant to Part 40, registered entities that submit rule changes and related procedures relating to 24/7 operations should include comprehensive explanations of changes, expected effects on risk, and mitigation strategies. In addition, such rule changes must contain an explanation and analysis that demonstrates the registered entity’s compliance with all relevant provisions of the CEA, including the applicable Core Principles, and the Commission's regulations thereunder. 24 Further, registered entities are required to provide an explanation of any substantive opposing views that were expressed to them by governing board or committee members, entity members, or market participants, which were not incorporated into the rule. 25 Recognizing and addressing opposing views is especially important when introducing 24/7 trading and associated clearing activities, as these perspectives can highlight unique operational, risk, or compliance 23 17 CFR § 39.18(b)(2). 24 17 CFR § 40.6(a)(7)(v); and 17 CFR § 40.5(a)(5). 25 17 CFR § 40.6(a)(7)(vi); and 17 CFR § 40.5(a)(8).

9 concerns that may arise from continuous market activity, ensuring that all potential impacts are thoroughly considered by the registered entity before implementing 24/7 trading and associated clearing activities for particular products or markets.
VI. Intermediation
FCMs play a critical role in the exchange-traded derivatives market by acting as intermediaries that facilitate transactions between customers on one side and DCMs and DCOs on the other. As market intermediaries, FCMs hold funds deposited by customers to margin and clear futures and cleared swap positions as well as funds accruing to customers as a result of such positions. FCMs also perform daily settlement functions with DCOs on behalf of their customers. FCMs that are clearing members of a DCO also perform an essential function in the clearing process by guaranteeing their customers’ financial obligations to the DCO. As such, 24/7 trading and associated clearing activities raise important risk-management considerations for FCMs. In addition to general operational risk issues related to information security, business continuity/disaster recovery planning, and capacity and performance planning, FCMs should consider the following FCM-specific compliance requirements. A. Compliance with Segregation Requirements The CEA and Commission regulations thereunder require that an FCM treat customer funds as belonging to customers and not as the property of the FCM, and that the FCM segregate customer funds from its own funds in designated customer accounts maintained at certain permitted depositories. 26 Additionally, the CEA and Commission regulations thereunder prohibit an FCM from using the money, securities, and property of one customer to margin or settle the trades or contracts of another customer. The CEA and Commission regulations thereunder effectively require an FCM to add its own funds (referred to as “residual interest”) into segregation in an amount equal to the sum of all customers’ undermargined amounts, including customer account deficits, to prevent the FCM from being induced to use one customer’s funds to margin or carry another customer’s trades or contracts. 27 FCMs must comply with the segregation requirements at all times. Extending trading hours to a 24/7 basis without settlement during the weekend or holidays may cause FCMs to violate segregation requirements, and possibly capital requirements, if there is significant volatility in the relevant market or products. Therefore, consistent with the risk-management requirements of Commission Regulation 1.11, an FCM intermediating transactions on a 24/7 basis is expected to assess and adjust, as appropriate, the targeted amount of residual interest it seeks to maintain in segregated accounts, and implement other appropriate risk-management processes, to account for the risks associated with 24/7 26 7 U.S.C. 6d; 17 CFR § 1.20; 17 CFR § 22.2; and 17 CFR § 30.7. 27 7 U.S.C. 6d(a)(2);17 CFR §§ 1.20 and 1.22; 17 CFR § 22.2, and 17 CFR § 30.7.

10 trading and associated clearing activities.
28 Pursuant to Commission Regulation 1.11, an FCM’s process for establishing a targeted amount of residual interest must be reasonably designed to ensure that the FCM remains in compliance with the segregation requirements at all times. 29

FCMs should also consider other risk mitigating options, including customer prefunding of accounts that trade on a 24/7 basis. B. Adequate Customer Disclosures of Risks Extending trading hours to a 24/7 basis may expose FCMs and customers to additional risks beyond those associated with trading during traditional market hours. For example, FCMs may need to enhance existing risk management programs to address weekend, holiday, and overnight trading, including auto-liquidation of undermargined customer accounts. The implementation of auto-liquidation may result in a situation where a sudden, large price move could trigger numerous simultaneous, same-direction orders, and result in further liquidations. The auto-liquidation of customer positions may also be exacerbated by an inability of customers to deposit additional margin during non-banking hours. In addition, auto-liquidation during extended trading hours may impact customers of an FCM that actively trade during weekend and overnight hours and may also impact customers of the FCM that elect to trade only during traditional trading hours. FCMs should ensure that appropriate risk disclosures regarding all applicable aspects of extended trading hours are provided to customers and the public consistent with Commission Regulation 1.55. 30

C. Risk Management Program
Commission Regulation 1.11 requires each FCM holding customer funds to establish and enforce a system of written risk policies and procedures designed to manage the risks associated with the activities of the FCM. 31 Specifically, an FCM’s risk management program is required to address risks associated with the segregation of customer funds, operational risks, and capital risks. FCMs that offer trading during extended hours should consider whether amendments to risk management policies and procedures are necessary to address the risks associated with trading during extended hours. D. Operational Capabilities and Staffing To comply with Commission Regulation 1.11, FCMs must maintain adequate operational capabilities and staffing to effectively facilitate customer trading during extended trading 28 Commission Regulation 1.11 requires FCMs that hold customer funds to implement a risk management program that includes, among other elements, a process for establishing a targeted amount of residual interest. 17 CFR § 1.11. 29 17 CFR § 1.11. 30 17 CFR § 1.55. 31 17 CFR § 1.11.

11 hours. 32
This includes an FCM maintaining necessary front-office and back-office systems with adequate staffing to ensure that such systems are operational. FCMs should further consider whether critical third-party service providers can perform the necessary services for FCMs to operate in a manner consistent with Commission and exchange requirements during extended trading hours.
VII. Conclusion
This advisory is intended to assist registered entities in developing materials for rule submissions or other filings related to 24/7 trading and associated clearing operations. Although not exhaustive, it identifies key considerations and provides clarity to the marketplace as a whole concerning the potential risks presented by 24/7 models, and the areas in which these risks could, or should be, mitigated, in accordance with the CEA and Commission regulations thereunder. Commission staff recommends that any DCMs, SEFs, or DCOs considering 24/7 trading or clearing operations for specific products or markets, and any FCMs seeking to intermediate such operations, engage with Commission staff in advance. This advisory is not intended to, does not, and may not be relied upon to create any rights, substantive or procedural, enforceable by law by any party in any matter. This advisory does not provide any no-action position with respect to a recommendation by any division that the Commission initiate an enforcement action for failure to comply with the CEA or Commission regulations thereunder. Further, this advisory is not intended to, does not, and may not be relied upon to create any new binding rules or regulations, or to amend existing rules or regulations. This advisory represents only the views of the Divisions and does not necessarily represent the views of the Commission or of any other division or office of the Commission. Questions concerning this advisory may be directed to Roger Smith, DMO, rsmith@cftc.gov; Eileen Donovan, DCR, edonovan@cftc.gov; or Liliya Bozhanova, MPD, lbozhanova@cftc.gov. Sincerely, _______________________ Richard Haynes Acting Director Division of Clearing and Risk 32Commission Regulation 1.11(e) (providing that an FCM’s risk management program must address operational risk, among other risks). 17 CFR § 1.11(e).

Joshua Beale
Acting Director
Division of Market Oversight

DJ Hennes
Director
Market Participants Division