Comment Text:
The principal markets for CFTC regulated commodity futures and futures options already transact very close to 24 hours a day. So the issue at hand is really around the 7, not the 24, unless it can be shown that the currently uncovered 2 days have radically different 24 hour characteristics than the 5 (and change) existing trading days. This may well be the case, and merits further exploration by the Commission's staff.
From a clearing perspective there is a single critical issue: Is there access to financial liquidity on weekends? Are there settlement bank funding desks staffed and available? Are there repurchase and reverse repurchase markets for US government securities open and available? Are there securities lending desks open and available? Are the transfer agents for DCO approved money market mutual funds open and available? Alternatively, are there reasonably liquid alternatives to the above staffed, open and available?
With respect to the existing near 24 hour trading days, the answer is 'yes.' Furthermore, the CLS foreign currency payment-vs-payment system is open from roughly 4:00 p.m. EDT Sunday afternoon until 8:00 p.m. EDT Friday evening (22:00 CET Sunday until 02:00 CET Saturday morning) facilitating currency conversion within reasonable risk parameters. These times overlap nearly exactly with the current 'extended' trading hours of the existing principal futures and futures options markets, and seem consistent with current proposals for extended trading hours by certain equity securities markets.
We know that Sunday is the first business day of the week for most of the financial markets in the Middle East. It is conceivable that the funding desks of a number of the global banks could, through their branches in that region, meet some of these financial liquidity needs. However, to my knowledge, that has yet to happen. If and when it does, that would leave only a gap on Saturday. It is not at all clear how that gap is to be filled, or how it will be made cost effective for a reasonable number of providers to do so. When the Commission observes that coverage for the provision of financial liquidity is readily available to all interested registered FCMs and DCOs on weekends then and only then should it approve trading between the close of business on Friday afternoon and the opening on Sunday afternoon. In the meantime it is no bad thing that US markets open last and close last on a weekly basis.
