Overnight trading: clearing letters, reference prices and an earlier LULD snapshot

Three filings published by the SEC between 30 September and 7 October deal with the less visible mechanics of extended-hours trading: who stands behind overnight trades, which prices risk checks use, and when overnight price bands are fixed. Together they show the post-trade, risk and market-data work firms need to finish before the national securities exchanges and SIPs extend their hours.

Nasdaq: clearing firms must sign up for the Night Session

Nasdaq’s filing, SR-NASDAQ-2026-084, was published on 30 September. It amends Equity 2, Section 9. A member that trades in the Night Session but clears through another member will need that clearing member to “affirm to the Exchange in writing” that it accepts responsibility for “any and all trades executed during the Night Session” by that member. The affirmation can be a letter of authorisation, guarantee or consent, or any other agreement Nasdaq accepts.

Nasdaq’s rulebook defines the Night Session as 9:00pm to 4:00am ET, Sunday to Thursday. The filing replaces a version withdrawn on 28 September that needed a wording fix.

The practical effect: a give-up arrangement that covers daytime trading will not on its own cover overnight trading on Nasdaq. Clearing firms must decide explicitly whether to accept that exposure.

MIAX Pearl: no overnight prints as reference prices

MIAX Pearl Equities says it does not intend to trade outside 4:00am to 8:00pm ET. Its filing, SR-PEARL-2026-41, also published on 30 September, amends two risk controls:

• Limit Order Price Protection (Rule 2614)
• Trading Collars (Rule 2618)

Under the changes, when the protected best bid and offer is unavailable, the controls will use last-sale prices only from the windows when Pearl is open. Prints from the overnight session, expected to run from 9:00pm to 4:00am, will be ignored.

The exchange says overnight trading may involve “lower liquidity, high volatility… unlinked markets… wider spreads”. It warns that using an overnight print could produce “a reference price unrelated to the securities’ current market” and cause limit orders to be cancelled wrongly or left open when they should not be.

LULD Amendment 29: the snapshot moves to 7:30pm

On 7 October the SEC summarily put Amendment No. 29 to the LULD Plan into effect, temporarily for up to 120 days. The amendment moves the “Consolidated Price” used for Overnight Price Bands from 7:45pm to 7:30pm ET. That price is the consolidated last round-lot sale, and it sits alongside the listing market’s official close as a reference price.

Robinhood asked for the change in a comment letter on Amendment 27. The plan participants said the earlier time matches current ATS practice. It gives ATSs that will keep trading between 8:00pm and 9:00pm, when exchanges are closed, enough time to calculate and distribute bands before their 8:00pm starts. The participants asked for summary effectiveness so firms could implement on 6 December 2026, “reducing operational risk and avoiding late system changes”.

Why it matters

Each filing points to a separate piece of work:

• Clearing firms need to update their Nasdaq Night Session paperwork and decide, client by client, whether to guarantee overnight trades, with intraday and overnight credit limits to match.
• Broker and algo risk teams should not assume every venue uses the same reference price overnight. Pearl’s approach means a limit order resting there may be checked against a late-afternoon print, not an overnight one.
• ATS operators and market data teams need their band calculations reading a 7:30pm consolidated print, not 7:45pm, for the December go-live.

Sources

• SEC Release 34-106548, SR-NASDAQ-2026-084, 30 September 2026 — https://www.sec.gov/files/rules/sro/nasdaq/2026/34-106548.pdf
• SEC Release 34-106554, SR-PEARL-2026-41, 30 September 2026 — https://www.sec.gov/files/rules/sro/pearl/2026/34-106554.pdf
• SEC Release 34-106624, LULD Plan Amendment No. 29, 7 October 2026 — https://www.sec.gov/files/rules/sro/nms/2026/34-106624.pdf