Trading Industry Calls for Shorter European Market Hours Inbox

Ricardo Esteves

Ricardo Esteves has seen business and economics through many lenses. He joined the Financial Services Industry in 2009, and has been a financial journalist since 2011. He holds a degree in Business Administration and has experience producing real-time news, from both buy-side and sell-side, as well as for retail traders, brokers and service providers. Esteves' work has appeared in a variety of online publications including FX Street and FinanceFeeds.

European Central Bank

Trading Industry Calls for Shorter European Market Hours Inbox

November 8, 2019

ECB - trading industryA joint letter to the LSE and other European trading industry, the Association for Financial Markets in Europe (AFME) and the Investment Association (IA) have 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).  The London Stock Exchange (LSE) and other European trading venues are being called to review trading hours across Europe in a bid to improve culture, diversity and wellbeing on trading floors, and create more efficient markets. A reduction of 90 minutes in European markets would create more efficient markets, benefiting savers and investors – traders in the investment management and banking industries argue.

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. Currently, the first treading hour is costlier as it attracts little liquidity, while the final hour attracts around 35% of total daily volume.

Europe has 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 has costs in recruiting talents and traders’ mental health and wellbeing. The shortening of trading hours is expected to improve work-life balance and provide create 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 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.”

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