Traders in the investment management and banking industries are calling on the London Stock Exchange (LSE) and other European trading venues to review trading hours across Europe in a bid to improve culture, diversity and wellbeing on trading floors, and create more efficient markets.

In a joint letter to the LSE and other European trading venues, the Association for Financial Markets in Europe (AFME) and the Investment Association (IA) have today requested a review into equity market opening hours across Europe, with a view to shorten operating hours from 8am – 4.30pm, to 9am – 4pm GMT (9am – 5.30pm, to 10am – 5pm CET).

A reduction of 90 minutes in European markets would create more efficient markets, benefiting savers and investors. Currently, the first hour of trading often attracts little liquidity and subsequently is a more costly time to trade, while the final hour attracts around 35% of total daily volume. Shortening the hours would concentrate liquidity leading to more consistent trading costs and provide greater time for traders and the market to digest corporate announcements.

The current opening hours for major trading venues in Europe are some of the longest in the world at 8.5 hours, when compared to other global markets, such as the US (6.5 hours) and Asia (6 hours), with traders expected to start their day long before markets open and close. This long hours culture impacts on traders’ mental health and wellbeing. It has also been identified as a key obstacle in recruiting and retaining more diverse talent, in particular for those with family or caring commitments.

It is hoped the proposed shortened day could also have an impact on workplace culture by improving work-life balance, and providing a necessary step towards creating more diverse and inclusive trading floors.

April Day, Managing Director, Head of Equities at AFME, said:

“AFME and the IA are currently in discussions with the major European cash equity exchanges to explore a reduction to trading hours. A shorter trading day would not only improve market structure but would also go a long way towards building a more diverse trading floor and fostering better mental health. Equities trading risks lagging behind a wider financial services industry push for more diversity and inclusion unless the long trading day is tackled by an industry-wide approach.”

Galina Dimitrova, Director of Investment and Capital Markets at the Investment Association, said:

“From boardrooms to trading floors, we need to improve the ways our businesses work to create more inclusive environments where all employees can thrive. Shortening trading hours, enabling a better work-life balance could bring significant benefits to City workers and firms, who will be able to attract a broader diversity of talent. We have heard many deeply moving stories of traders’ mental health and personal life being impacted by their working hours. Whilst it is no silver bullet, we hope this European-wide review could start to lead to a step change in more efficient markets to the benefit of savers and those who operate them.”

To view the proposal, click here.

Source: Investment Association

From an analyst at Tabb Group:

Makes sense from well-being and liquidity view (& may combat rising close volume) but would love to know what the exchanges really think, particularly as the LSE just launched a global equity segment citing importance of crossover between Asia/US timezone https://t.co/dwRBK3K6nl

— Tim Cave (@_TimCave) November 7, 2019

From the former chief executive of the London Stock Exchange Group:

Quantum communication networks and computers will pretty soon work 24/7. They won’t break the rules, will work in a no-latency environment, and offer nearly instantaneous entangled analysis and execution in a seamless way… TBC https://t.co/a0LcJZgX1j

— Xavier R. Rolet (@xrolet) November 7, 2019

… Part 2/ They will also operate out in space, from networks of low-orbiting or geostationary satellites. Once we’re figured a way to build quantum repeaters, they will offer 100% secure and un-hackable networks… TBC https://t.co/a0LcJZgX1j

— Xavier R. Rolet (@xrolet) November 7, 2019

… Part 3/ Is the debate really about cutting trading hours to accommodate stressed out but well-payed humans ? Truly ? I remember trading the US/Japan/Europe shift in the eighties, 6 1/2 days week …TBC https://t.co/a0LcJZgX1j

— Xavier R. Rolet (@xrolet) November 7, 2019

… Part 4/ … as Tokyo was trading a half day every other Sunday at the time, sleeping maybe 3 hours a night to keep up… Bring on the machines ! https://t.co/a0LcJZgX1j

— Xavier R. Rolet (@xrolet) November 7, 2019