At a Glance
- With Nasdaq moving to 23-hour trading, the traditional benefits of confidentiality, pricing protection, and limited market exposure may be harder to maintain.
- Greater potential for information leakage, real-time price movement, and heightened Regulation FD pressures could disrupt deal certainty and pricing outcomes.
- Issuers, underwriters, and counsel may need to rethink timing, marketing strategies, and transaction documents to operate effectively in an almost always-open market.
On April 10, 2026, the SEC approved Nasdaq’s proposal to extend trading hours to 23 hours a day, five days a week. If implemented, this shift may reshape how certain public offerings are executed. Among the deal types most affected will be the confidentially marketed public offering (CMPO), a transaction where material advantages depend in part on traditional market hours. We examine specific ways in which near-continuous trading may challenge CMPO execution.
What is a CMPO?
A CMPO is a registered public offering conducted as a “takedown” from an existing Form S-3 shelf registration statement. In a CMPO, the underwriters discreetly “test the waters" with a targeted group of institutional investors before making any public disclosure of the contemplated offering. Underwriters contact potential investors and ask whether they are willing to receive confidential information about the offering, agree to keep that information confidential, and refrain from trading the issuer’s securities until the offering is completed or abandoned, known as “wall crossing.” Once sufficient demand is established, the offering is “flipped” into a public offering through a press release and the filing of a prospectus supplement. The offering is then priced following a brief public marketing period — typically on the evening of the announcement — with the deal announced pre-market the following morning.
Often, this CMPO structure is utilized to ensure a deal qualifies as a “public offering” under Nasdaq Rule 5635, known as the “20% Rule.” The 20% Rule requires shareholder approval for any issuance below market value that equals or exceeds 20% of a company’s outstanding shares or voting power prior to the issuance. However, by transitioning the confidential process into a flipped public offering (and following certain other procedures), issuers can satisfy Nasdaq’s definition of a “public offering” that provides an exception to the shareholder approval requirement, enabling immediate execution of the deal without the delay and uncertainty of a shareholder vote.
Core Advantages for Issuers
CMPOs have become a preferred tool for issuers in high-growth, volatile sectors like life sciences and data centers due to several distinct advantages:
- Execution certainty. If institutional interest is low during the confidential phase, the issuer can simply abandon the raise. Because the company typically makes no public announcement in this situation, the issuer avoids potential stock price decline and reputational taint associated with a withdrawn public offering.
- Price protection. Confidential marketing prevents shorting and speculative downward pressure on the stock price that typically follows a public deal announcement. By the time the public knows about the deal, the deal is able to be priced and no regular-hours trading can occur.
- Speed and agility. The shift from confidential to public marketing occurs after the market closes, with lead investors having notified the underwriters of their maximum deal price which, following the brief public marketing period, allows the terms to be agreed upon and the underwriting agreement signed before the market opens the next morning. This narrow window of public exposure minimizes the time an issuer's stock is vulnerable to market volatility.
The New Nasdaq 23/5 Rule
On April 10, 2026, the SEC granted accelerated approval of Nasdaq’s proposal to extend trading hours for National Market System (NMS) stocks and Exchange-Traded Products from 16 hours to 23 hours per day, five days per week (the “Nasdaq 23/5 Rule”). Although the rule framework has been approved, actual Night Session trading cannot begin until several preconditions are satisfied:
- The Securities Information Processors (SIPs) must implement the capability to collect, consolidate, and disseminate market data during the Night Session.
- The DTCC’s National Securities Clearing Corporation (NSCC) must extend its clearing operations to cover the overnight window (production launch is targeted for June 28, 2026, subject to regulatory approval).
- Nasdaq must file a follow-up proposed rule change confirming its readiness and that of the SIPs.
Current industry timelines point to a launch in late 2026 or early 2027.
The Nasdaq 23/5 Rule is part of a broader structural shift toward extended trading across US exchanges. The SEC approved NYSE Arca’s proposal to move to 22 hours per day trading in February 2025 and approved the 24X National Exchange for near-continuous trading in November 2024. The common driver is rising investor demand for access to US equities during overnight hours, particularly among investors in Asia and other jurisdictions whose business hours do not coincide with traditional US market hours.
Currently, Nasdaq’s regular trading session runs from 9:30 a.m. to 4:00 p.m. ET Monday through Friday. Investors can also participate in extended sessions, which include a pre-market window from 4:00 to 9:30 a.m. and an after-hours window from 4:00 to 8:00 p.m. ET.
Under the new rule, Nasdaq will operate in two primary sessions — the day session and the night session. The day session will combine the current pre-market, regular market, and post-market hours into one single session. There are no substantive changes to how trading operates during these hours. All existing requirements, order types, and processes (including the Opening and Closing Crosses) remain the same.
Daily trading will pause for one hour each weekday from 8:00 to 9:00 p.m. ET. This one-hour gap allows Nasdaq to conduct system maintenance, process corporate actions, and shift operations to the distinct trading system instances used for the night session. This one-hour pause would also permit Nasdaq to address the technical implications of a 23-hour trading day and facilitate internal market testing and systems updates/improvements.
The Night Session is the core new feature and will run from 9:00 p.m. to 4:00 a.m. ET. The trading week will begin on Sunday at 9:00 p.m. ET and conclude on Friday at 8:00 p.m. ET. The Night Session will offer significantly reduced functionality compared to the Day Session: only limit orders will be permitted; unpriced and pegged orders will be rejected; and member firms must connect through separate, dedicated Night Session ports. Liquidity during overnight hours is expected to be thinner, with wider bid-ask spreads. While information leaks may have a somewhat muted immediate price impact overnight, any price movements that do occur could be more volatile and harder to manage in less liquid conditions.
Nasdaq will continue to close its markets during the weekend hours, except that the trading week will commence with a night session on Sunday at 9:00 p.m. ET. The trading week will end at the conclusion of the day session on Friday. The greater focus on the additional trading session may increase interest for markets participants to trade during the 4:00 to 8:00 p.m. ET window.
How the Nasdaq 23/5 Rule May Impact CMPOs
The near-continuous trading environment created by the Nasdaq 23/5 Rule will affect CMPOs in several distinct ways, each of which merits separate consideration.
Information Leakage Risk
The central advantage of a CMPO — confidential marketing while the market is closed — is potentially undermined by a market that is open all but one hour per day. Traditionally, wall crossing and confidential bookbuilding occurs during the one to three business days prior to the public flip. The wall-crossed investors are restricted from trading during this period, however, there is always risk that information about the offering’s existence may leak to non-wall-crossed market participants who may be free to trade. Because trading currently primarily occurs only during the day session, leakage would become apparent to the issuer and underwriters prior to the public flip, permitting them to abandon the offering. However, with a move to 23/5 trading, market participants who receive leaked information could pressure the stock price following the public flip. Any resulting stock price movement could undermine the offering’s pricing, spook some investors from participating, or force the issuer to abandon the deal entirely.
Regulation FD and Cleansing Obligations
Extended trading hours also heighten the Regulation FD and insider trading compliance dimensions of CMPOs. If a leak occurs and the stock price moves materially during overnight trading, particularly if the issuer subsequently decides to abandon the offering, the issuer may need to issue a public “cleansing” press release disclosing any material nonpublic information that was shared with wall-crossed investors during the confidential phase. This cleansing obligation, which is typically negotiated as part of the wall-crossing confidentiality agreement, allows wall-crossed investors to resume trading. In an environment where overnight price movements are more visible and more volatile, the practical likelihood of triggering a cleansing disclosure — and the associated reputational and market consequences — increases.
Disclosure timing more broadly will require reconsideration. Under the traditional model, issuers could release material news after 8:00 p.m. ET with confidence that no on-exchange trading would occur until the following morning. Under the Nasdaq 23/5 Rule, material news released during evening or overnight hours will be immediately reflected in on-exchange prices, not just on alternative trading systems. This may have direct implications for how companies time the “flip” of a CMPO from the confidential to the public phase, and for the coordination of earnings releases and other material announcements around pending offerings.
Pricing Challenges
In a traditional CMPO, issuers may provide certain previously nonpublic material information to investors and the general public at the time of the public flip. This may include information about a potential acquisition or divestiture the issuer is considering or financial information regarding a recently completed quarter. With a move to 23/5 trading, the issuer’s stock price may move on its primary exchange upon release of this information, which could impact the pricing the underwriters are expecting for the deal. This may significantly impact deal certainty, which is typically the greatest value to using the CMPO structure. It also will likely impact deal pricing as investors will see the news priced into the stock before the deal price is set, forcing investors to potentially demand bigger price discounts from issuers.
Marketing and Bookbuilding Constraints
With the off-market window compressed to one hour, deal teams will need to rethink when and how they conduct the confidential phase of a CMPO. Several adaptations are likely:
- First, wall-crossing activity may shift to weekends: Nasdaq’s markets will remain closed from Friday at 8:00 p.m. ET until Sunday at 9:00 p.m. ET, providing a window in which underwriters can approach investors without the risk of on-exchange trading on leaked information. This would require investors to be available over the weekend, altering the established Monday-through-Thursday cadence of traditional CMPO pricing.
- Second, issuers and underwriters may limit the number of investors approached during the confidential phase to reduce the probability of leaks.
- Third, the “flip” timeline from confidential to public may need to be further compressed, with deal teams prepared to launch the public offering immediately upon establishing sufficient demand.
- Finally, it is possible that pricing of CMPOs will move to 8:00 p.m. ET when the market will be closed each day so the deal can be priced off a nonmoving trading price.
Transaction Document Implications
Many offering documents and transaction agreements were drafted against the backdrop of a 16-hour trading day with the vast majority of the trading occurring from 9:30 a.m. to 4:00 p.m. ET Monday through Friday. Key defined terms, including “business day,” “trading day,” and “market close,” may need to be revised to account for a 23-hour trading environment. In transactions with warrants, references to volume weighted average price (VWAP) that previously captured a discrete trading session may now span overnight hours with materially different liquidity profiles, potentially distorting this pricing benchmark. Underwriting agreements, wall-crossing scripts, and email confidentiality agreements should all be reviewed for timing provisions that assume a traditional market structure. Counsel should also consider how the expanded definition of “Business Day” in Nasdaq’s amended rulebook interacts with existing contractual definitions.
What Should Market Participants Do to Prepare?
Although the Night Session is not yet operational, the approval of the Nasdaq 23/5 Rule, alongside similar approvals for NYSE Arca and 24X, signals that near-continuous trading is coming. Market participants should begin preparing now. Issuers and their counsel should review existing shelf registration statements, underwriting agreement templates, and wall-crossing scripts to identify timing-dependent provisions that require updating. Investment banks should consider whether their CMPO marketing protocols need to be restructured around weekend wall-crossing (which will require portfolio managers to be available over the weekend), 8:00 p.m. pricing, or compressed flip timelines. All parties should monitor DTCC and SIP readiness milestones, as well as Nasdaq’s follow-up rule change filing, which will set the definitive launch date. The investment banks that adapt their deal processes ahead of the Night Session’s launch will be best positioned to preserve the confidentiality and execution advantages that make CMPOs an essential tool in the underwriters’ toolkit.
