London’s Trading Hours Could Change!
London’s big bourse is under pressure to push the opening bell back. 75% of market participants want an hour lie in according to a survey by the London Stock Exchange (LSE), but what would the implications of that really be?
Trading hours obviously matter a whole lot less to long-term investors than they do to those lightning-fast supercomputers that hum on the daily. However, stock exchanges do compete, and that does affect everyone.
If Barclay’s, BP, and Burberry all deem Frankfurt a better home for their shares than London, big money-movers will be steered overseas. That leaves behind fewer buyers and sellers in Britain, thinner volumes, illiquidity, and, eventually, more expensive costs per trade which dig into returns.
Shaving sixty minutes off London’s trading hours (a 9 a.m. start instead of 8 a.m.) would cram more action into less time, actually helping liquidity.
The IA (Investment Association) and AFME (Association for Financial Markets in Europe) have confirmed that long hours are of no material benefit to savers or investors despite London’s longest trading days in the world. A massive talking point is mental health and the work-life balance for City professionals at the moment, too, so there’s a human element involved in the debate.
Taking the later train into work could provide some sleepy morning rest bite, and according to data collected by the London Stock Exchange, it’s crickets at the opening bell anyway. A third of all trading volume occurs at the end of the day when mega index funds rebalance their passive holdings, trades costing half as much at the close than at the open. Moving the clocks seems like a no-brainer. But you can’t please everybody!
When business gets busy and industries shift, investors could get impatient with London, offering their cash-for-equity stock purchases to other venues across Europe. They could also boon the derivatives market instead of buying normal shares.
None of this is good, so the alignment of market hours geographically and in terms of asset classes will probably be a hurdle before we see change. Lobby groups have confirmed they want to retain some overlap with activities on Wall Street in New York as well, the Mecca for investors. How are you spending your 8-9 hour in the markets?