CIRO warns clients on risks of trading outside market hours
While the flexibility can appeal to investors looking to react quickly to market-moving events, CIRO is emphasising that the conditions during extended sessions can differ substantially from those in the core trading day.
“Having the ability to trade outside regular trading hours may provide additional investor flexibility and sound appealing, but the same factors that create opportunity can also create risk,” said Kevin McCoy, Senior Vice-President, Market Regulation, CIRO. “Before placing a trade outside of regular trading hours, investors should understand how trading conditions can differ and how those differences may affect the price of securities they buy or sell.”
Risky aspects of extended hours sessions
The regulator identifies several key characteristics of extended hours sessions that investors should weigh carefully. Lower trading volume and reduced liquidity are among the primary concerns, as fewer participants in the market can lead to wider bid-ask spreads and trade prices that diverge meaningfully from those available during regular hours. Greater price volatility is also more common, particularly in response to earnings releases, economic data, or breaking news that surfaces after the closing bell.
CIRO is also directing investors to consider which order types are most appropriate during low-liquidity periods. In extended sessions, where spreads are typically wider, certain order types — particularly limit orders — can offer investors greater control over the price at which their trades are executed, compared to market orders that may fill at unexpected prices.
The move follows a period of growing interest in extended hours access across Canadian markets. As CIRO’s fiscal 2027 agenda signals further market regulation transparency, the regulator’s investor education output has become an increasingly visible part of its public mandate.
