Tomorrow’s Business: 3rd February 2020
Big banks and fund managers have urged the London Stock Exchange to push back its opening by an hour and a half, as the bourse considers trimming one of the longest trading days in the world. The suggestion comes as the LSE canvasses market opinion about making a change to its hours for the first time in 20 years. Markets in London are active from 8am until 4.30pm at present. But the Association for Financial Markets in Europe (Afme), which represents banks, and the Investment Association, which speaks on behalf of asset managers, both want the LSE to open at 9:30am and close seven hours later. The two industry lobby groups have been leading the charge to cut the opening hours for Europe’s largest stock market because, they say, the current eight-and-a half-hour day does little to help them easily buy and sell shares without affecting the market price. They also argue that such long hours are out of step with changing attitudes to mental health and employees’ work-life balance. London’s continuous trading day is harmonised with counterparts in Europe and designed to overlap with the trading hours of Asia and North America. By contrast rival exchanges in New York and Japan, which have bigger market capitalisations than London, conduct their business in two fewer hours. Hong Kong and Tokyo also break for lunch. Opening to meet demand from Asia was unnecessary, the lobby groups said. “In practice there is no discernible benefit . . . The overlap with Asia that exists for only part of the year — during the summertime — is not considered to be statistically significant.” Many investors and banks want to keep the market open in the afternoon to meet demand from the US. The final hour of its working day is typically the busiest in London. The LSE has proposed four alternatives to its current schedule. Its seven-week consultation period closes on Friday. Afme and the IA backed a 9am-to-4pm option but made another suggestion not offered by the LSE: 9.30am to 4.30pm, which would keep the overlap with the US market but still cut the day by 90 minutes. The groups said they had received support from more fund managers and banks in Europe and the UK for the 9.30am start. “While [it] was initially dismissed as unappealing, there is far more acceptance than we had initially assumed,” they said. To support their push, the groups have recommended a harmonised pilot programme across all stocks and major exchanges and trading venues for 12 months to examine the impact on markets and companies. The groups also suggested that the LSE make changes to its Regulatory News Service, a newswire through which companies distribute sensitive information such as earnings, deals and personnel changes. They recommended that releases be limited to a window 60-90 minutes prior to the market open. That would mean an 8am start at the earliest, compared with the current 7am.
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