Recent press articles (e.g. here and here) reopened the discussion around exchange trading hours. Reasons for extending trading hours are manifold. It’s hard to convince retailers to switch from watching Netflix to start watching stock pick lists, if the market isn’t even open in the evening. But it is not just retail night owls. Also, retailers living in Asia are interested in trading in the US. For exchanges to accommodate professional traders in other regions isn’t new idea. Many derivatives markets (e.g. Eurex, MX) have extended their trading hours years ago to garner flow from the other side of the globe.

Opponents argue that extending trading hours just reduces the liquidity for any point in time, as it spreads available liquidity out throughout the day. While this might be true in the short run, it doesn’t account for increasing liquidity by widening the investor base. A second concern is related to work life balance of traders. With ever increasing trading hours staring at the screen from the opening auction until the closing bell becomes unreasonable. Sadly, JPX is one of the few markets that still today give their traders a proper lunch break.

Another area that deserves more attention is technology. Many exchanges still require regular downtimes to maintain their systems and prepare for the next trading session. To that point, HKEX recently announced that their next gen trading platform will offer near 24-hour derivatives trading. There are probably plenty of other markets that are looking at similar requirements. But this is not just an issue for exchanges. Trading firms will be impacted too. Their operations must work out ways to cope with ever increasing trading hours and shrinking windows for downtime.

Today, we have crypto markets that never stop. We have FX markets that rarely stop, and we have equity markets which tend to follow a traditional 9 to 5. The direction clearly points to longer trading hours, and operations as well as technology must work out how to make this happen.