Shorter Trading Hours Could Boost Diversity And Wellbeing

Shanny Basar

Respondents to the London Stock Exchange’s consultation on shortening the trading day said it was unlikely to lead to an increase in volume but could lead to improvements in diversity and wellbeing.

The London Stock Exchange said in a report today that it received more than 140 responses to its consultation, ranging from individual investors to global investment banks and industry associations.

The report said that  majority of participants did not view longer trading hours as a benefit to liquidity. They also said that although shorter hours would improve the velocity of trading and liquidity available on the order book, very few thought this would result in an increase in trading volumes.

“A significant majority of respondents were sympathetic to the arguments that a reduction of market hours could lead to improvements in diversity and wellbeing,” said the report.

The Association for Financial Markets in Europe and the Investment Association both said in their response that a shorter day would improve diversity.

“In a recent survey, nearly 50% of respondents identified shorter trading hours from nine other possible factors as a means to improve gender diversity, and second only to flexible working policies (at nearly 60%),” said their response.

They also highlighted that excessively long hours contributes to trading remaining one of the areas of financial services where staff face significant mental health issues

The London Stock Exchange found that the majority  who supported shorter hours said there would ideally need to be harmonisation across European exchanges and other trading venues.

“Without this harmonisation, the goals of improved diversity and wellbeing would be harder to achieve, given the pan-European nature of many trading roles in the financial industry,” said the report.

Other European exchanges and trading venues are currently consulting on market hours.

“We await their public findings as these will be an important factor in considering any potential changes to our trading hours, given the indicated preference for harmonisation,” added the LSE.

The exchange also said it would welcome any further quantitative modelling, academic or case study material on the issue of shower hours.

“London Stock Exchange will continue to engage actively with stakeholders and industry bodies on this topic, including discussions in relation to medium-term changes in working arrangements (such as increased working from home) that might result from the COVID-19 experience,” added the report.

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