As the extended trading hour debate continues, experts speaking at an exclusive London Stock Exchange panel earlier this week agreed that when it comes to equities, this would essentially be superfluous.
The idea of the asset class following in the footsteps of the FX, crypto and retail markets – with increasingly 24-hour processes in place – was relatively dismissed, with a move even potentially in the opposite direction suggested.
Byron Griffin, head of execution sales and microstructure at ODDO BHF, asserted that while extended hours works very well for crypto it would not work for equities.
“I actually think we need to shorten the hours to make it more attractive to a generation that doesn’t want to sit there absolutely glued to their screens for eight hours a day. There’s a gap in the middle of the day between about 9.30 – 10am, when the US numbers come out, where volumes just plateau.
“You could take out that whole chunk of the day, the volume would still go through, nothing bad would happen and everyone would get hours back on the day.”
Simon Dove, managing director, head of liquidity at Instinet, agreed, asserting that as metrics and data suggest it doesn’t actually matter whether the markets are open for 4 hours or seven to eight, the priority for the equities market is more so the reality of work life balance.
“I don’t want to have to choose between work and family. The way our hours work, it’s not a very friendly environment for families. The market does not need to open until 9am, the market could close at 3pm and still have the same volume.”
Further, he reminded the room that the UK had tried to do something about market hours last year which was dismissed due to European players viewing it as an anti-competitive move for their own markets.
“Equities is different [to the FX and crypto markets] and though the buy-side have been very, very vocal, unfortunately it’s been dismissed.”
Read more: Does the industry really want to be on 24/7?
Jessica Morrison, head of market structure and quantitative analytics at the LSE confirmed that the topic is still “very much a live debate internally at the moment” for the exchange.
She added: “From a personal opinion, as there is not as much liquidity in the early morning, there doesn’t seem to be any benefit to shortening the end of the day as the US is going to wake up at the same time regardless, so you’re not going to move the liquidity earlier.”
The panellists further went on to add that it is vital to remember the difference between volume and liquidity; while extending hours means numbers are going to go up, this does not necessarily translate to the underlying bedrock of natural liquidity.