Exchanges Open; FSB Warns on Private Credit Risks!

Introduction

Two developments out of the past 24 hours demand attention from investors and institutional operators. First, major U.S. exchanges and derivatives venues confirmed they will remain open on key holiday dates, ensuring trading continuity during a sensitive year‑end window. Second, the Financial Stability Board (FSB) issued a string of warnings about the reliability of niche credit ratings as private credit and shadow banking expand—flagging potential systemic vulnerabilities and the prospect of tougher rules. Together these items touch both operational and structural dimensions of finance: liquidity and access now, and the stability of credit intermediation going forward.

Exchanges Stay Open: Why operational continuity matters

Nasdaq, the New York Stock Exchange, Cboe, IEX and major derivatives platforms confirmed they will follow their normal holiday trading schedule (with early close on Christmas Eve) despite a presidential directive that closed federal executive offices on those dates. The decision clarifies that the executive order does not apply to privately run trading venues and prevents confusion that could have impaired order execution, settlement, and year‑end portfolio adjustments.

Practical implications for investors and firms

• Liquidity preservation: Open trading days during thin holiday sessions reduce the risk of extreme price gaps and allow participants to rebalance or hedge positions.
• Operational planning: Broker‑dealers, custodians and clearinghouses avoid last‑minute disruptions in settlement flows and margin calls.
• Regulatory clarity: The public confirmation from exchanges helps settle routing and compliance decisions for large institutional orders executed around quarter and year end.

Analogy: The financial equivalent of keeping the airport open

Think of the exchanges’ decision like keeping a major airport operational during a holiday: even if government offices close, the transport hub must run to allow essential travel and freight to move. Closing would have stranded passengers (orders), disrupted supply chains (settlements), and amplified operational risk.

FSB Warning on Niche Credit Ratings and Shadow Banking

The Financial Stability Board issued a cautionary note focused squarely on the rapid growth of private credit and shadow banking. The FSB highlighted concerns about smaller credit rating providers that assess complex private and structured credit products. With the shadow banking sector estimated at roughly $250 trillion—accounting for a substantial proportion of assets outside traditional bank balance sheets—regulators are increasingly attuned to rating quality, leverage, and transparency risks.

Key points from the regulator

• Credibility of niche ratings: Smaller agencies and novel rating approaches may lack the historical data or methodological robustness to evaluate opaque private instruments accurately.
• Systemic exposure: The scale of non‑bank credit intermediation raises the potential for stress to cross from private credit to broader financial plumbing.
• Policy options under consideration: The FSB is exploring measures such as leverage caps, higher capital or liquidity requirements for entities in this space, and enhanced disclosure standards. A comprehensive project analysis is expected to carry into the coming year.

What this means for niche investors

Institutional investors, family offices and retail platforms that have leaned into private credit need to reassess counterparty and rating risk. Due diligence should go beyond headline ratings to include understanding cashflow stress scenarios, waterfall structures, and the identity and resilience of the originators and servicers behind the credit.

Actionable takeaways

• For traders and operations teams: Treat confirmed exchange hours as your operational baseline; finalize year‑end execution and settlement plans accordingly.
• For credit investors: Increase scrutiny of rating providers for private and structured products. Demand transparency on assumptions, default modeling and stress scenarios.
• For allocators and trustees: Consider stress testing private credit allocations under tighter financing conditions and follow regulatory developments closely—potential rules could alter returns and liquidity dynamics.

Conclusion

Recent confirmations from major exchanges and the FSB’s targeted warning together underscore two simultaneous priorities in finance: preserve near‑term operational continuity while elevating scrutiny on growing structural risks. Investors and firms that align execution plans with confirmed trading schedules and step up credit diligence for opaque private exposures will be better positioned to navigate year‑end activity and an evolving regulatory backdrop.