[ I N D E P T H | 2 4 H O U R E Q U I T I E S T R A D I N G ]
“ Having a core market session which includes an open, a continuous session and a close, is probably something the majority of the incumbent institutional investors and sell-sides and even venues want to maintain.”
JOHN FRUEN, HEAD OF EMEA MARKET STRUCTURE AND LIQUIDITY STRATEGY
AT UBS or even reduce market hours for equities, despite several major initiatives announced in the US in recent months.
“ We ran a consultation for our participants both on the continent and in the UK and no clear consensus emerged from it. In summary, the UK was more in favour of shortening whilst the continent preferred a status quo,” says Vincent Boquillon, head of cash equities at Euronext.
“ So given that there was no consensus among industry participants on buy-side, sell-side and industry associations, we don’ t see the immediate need to take action in that regard, however we remain fully supportive to engage with the industry if a need materialises.”
The situation in Europe is markedly different to the one developing in the US. As opposed to extending trading hours, in 2020, buy- and sell-side traders urged the London Stock Exchange and other European venues to shorten equity trading hours to 9am to 4pm GMT, aiming to improve trading floor culture, boost diversity, and enhance intraday liquidity.
After intense debate, exchanges rejected the proposals, arguing it wouldn’ t be a‘ silver bullet’ for diversity or mental health challenges.
“ There are several reasons why a reduction in hours could be viewed as a positive move. The ones that are most frequently quoted include fragmentation of liquidity. We have longer trading hours in the core session than the US do, with a tenth of the volumes. We talk a lot about venue fragmentation, but time is a fragmenting element as well and liquidity may be improved by shortening those hours,” suggests UBS’ Fruen.
“ The most recent argument has been around the transition to T + 1 and the fact that we are going to need to do a lot more post-trade allocation processing on T0, than we do today. Asking people to stay later to do that doesn’ t help work life balance in an industry which already has a reputation for longer working hours than may be offered to people elsewhere and may have an impact on the diversity of talent that can be recruited.”
Elsewhere, arguments exist that having wider coverage across the globe is more important than having extended hours to accommodate the global trading of equities. The benefits of overlapping with other markets seems more preferable than expanding or reducing trading hours.“ On balance, there are greater advantages potentially to be garnered from overlapping with Asia and Middle Eastern markets when you ' re sitting in Europe and then overlapping with the US markets,” argues Wicks.
“ I would come down on that ad-
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