No overnight reopening after a Level 3 circuit breaker halt: 16 US exchanges keep 4:00am ET restart

If the S&P 500 falls 20% and trips a Level 3 market-wide circuit breaker after 23-hour trading starts, US stocks will not reopen in that evening’s overnight session on the exchanges that have filed matching rule changes. Under the changes, published in the Federal Register since September, those exchanges will not resume trading before 4:00am ET on the following trading day, the same as today.

The latest two filings, from MX2 and the Long-Term Stock Exchange (LTSE), appeared in the Federal Register on 2 November. Both took effect on filing. Neither exchange intends to implement 23/5 trading “at this time”, but LTSE says it plans to implement the rule change on 6 December, the date on which “several exchanges intend to offer new overnight trading sessions that would be available from 9:00 p.m. ET to 4:00 a.m. ET.”

The problem the filings fix

All US equity exchanges and FINRA adopted uniform market-wide circuit breaker (MWCB) rules in 2012. A Level 1 (7%) or Level 2 (13%) fall in the S&P 500 after 9:30am ET and before 3:25pm ET halts trading for 15 minutes. A Level 3 (20%) fall at any time during the trading day halts trading “for the remainder of the trading day”.

Today, the MX2 and LTSE filings explain, that means “the earliest that any exchange would re-open trading after a Level 3 Market Decline is 4:00 a.m. ET the following day, since no SROs are open for trading before 4:00 a.m. ET.” Once overnight sessions start, the same words would require exchanges running them to reopen “at an earlier time, i.e., 9:00 p.m. ET on the same calendar day”.

The change replaces “for the remainder of the trading day” with a halt until 4:00am ET on the following trading day. The MX2 and LTSE filings say the exchanges, FINRA and industry representatives met, and “the collective decision was made to retain the 4:00 a.m. ET resumption time, notwithstanding the fact that an earlier resumption time would be possible”. They say the change is “not intended to make any substantive changes to the MWCB mechanism.”

Three reasons for staying shut overnight

The MX2 and LTSE filings give the same three reasons:

• Cooling off. With overnight sessions opening at 9:00pm ET, the cooling-off period “could be materially shortened, reducing one of the key benefits that the MWCB mechanism was designed to provide in the first place.”
• Who would be trading. Each exchange says it expects “that institutional investors will take more time to transition to a round-the-clock model”, but that their participation “may be of heightened importance following a Level 3 halt”.
• Overnight price bands. The SEC approved overnight LULD price bands on 5 August (our report). The filings say these “would help to assure a fair and orderly market during normal market conditions” but could “instead prevent normal price discovery following a Level 3 Market Decline.”

Who has filed

Federal Register notices on the Level 3 resumption change have been published for 16 exchanges:

• MEMX: 11 September
• New York Stock Exchange, NYSE American, NYSE Arca, NYSE National and NYSE Texas, and MIAX PEARL: 18 September
• Cboe BZX, Cboe BYX, Cboe EDGA and Cboe EDGX, and Nasdaq, Nasdaq PHLX and Nasdaq Texas: 8 October
• MX2 and LTSE: 2 November

MX2 says it understands that the other self-regulatory organisations (SROs) “have filed similar proposed rule changes”; LTSE says they “will also be filing” them.

FINRA Rule 6121.02, which governs halts in trading otherwise than on an exchange, still provides that after a Level 3 decline FINRA halts such trading “for the remainder of the trading day”. FINRA had not published a matching proposal on its rule filings page as of 2 November.

Why it matters

Analysis. Much of the 23/5 preparation so far has been about connectivity, clearing and price bands (our report on the 6 December start). This is the first rule set to answer a stress question: what happens overnight after a 20% fall. The answer is that nothing changes. Brokers, market makers and overnight venues can build a single rule into their halt logic for these exchanges: no session reopens before 4:00am ET.

The off-exchange side is still open. The MX2 and LTSE filings say “the market as a whole, including on- and off-exchange, will continue to be subject to harmonized rules”, but that depends on FINRA, whose rule governs trading away from exchanges. As of 2 November, FINRA Rule 6121.02 still reads “for the remainder of the trading day”.

What we are watching

• A FINRA proposal amending Rule 6121.02, and any further matching filings from other SROs.
• Whether industry-wide MWCB tests before 6 December include an overnight scenario.

Sources

• MX2 LLC, Release No. 34-106758 (SR-MX2-2026-09): Level 3 MWCB resumption, Federal Register, 2 Nov 2026 (SEC notice dated 28 Oct 2026)
• Long-Term Stock Exchange, Release No. 34-106763 (SR-LTSE-2026-26): Level 3 MWCB resumption, Federal Register, 2 Nov 2026 (SEC notice dated 28 Oct 2026)
• New York Stock Exchange, Release No. 34-106380 (SR-NYSE-2026-43): Level 3 MWCB resumption, SEC, 15 Sep 2026
• Federal Register notices on Level 3 MWCB resumption (16 notices), September to November 2026, Federal Register, 11 Sep to 2 Nov 2026
• FINRA Rule 6121, FINRA, accessed 2 Nov 2026
• FINRA rule filings, FINRA, accessed 2 Nov 2026