TRADERS CALL FOR SHORTER EU MARKET HOURS TO IMPROVE DIVERSITY & MARKET EFFICIENCY.
Thursday 7 November 2019
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.
A 2019 survey that covered 129 buyside heads of trading globally reported that the best way to attract and retain more gender diversity in trading is to provide a better work / life balance. Employees are increasingly looking for more work / life balance when they are looking for jobs.
Chart 5: What is needed to attract more gender diversity?:
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