A shorter trading day could boost diversity and wellbeing in what has historically been a male-dominated profession, according to a consultation conducted by the London Stock Exchange. However, the benefits would not be realised unless other European exchanges and trading venues followed suit.
“There was widespread consensus from respondents that any change to trading hours would ideally require a broadly aligned approach across European exchanges and other trading venues,” the LSE said in a statement.
The current European trading day is 0800-1630 UK time, longer than in Asia or Wall Street, and most market participants preferred a 0900-1600 trading day, with a minority calling for no change, according to the LSE.
The report showed that while the majority said shorter hours would improve trading velocity and liquidity on the order book, “very few” believe that this would result in an increase in trading volumes.
The LSE survey was conducted in December-January 2020 and was to be published in March but the deadline was extended due to Covid-19. Respondents ranged from individual investors through to global investment banks. The exchange said it will also monitor whether the period of remote working due to the coronavirus pandemic has altered any views on shorter trading hours.
Lobby groups for the industry have previously said they would support a 12-month pilot across all major European exchanges and trading venues.
The Association for Financial Markets in Europe and the Investment Association, in a joint response to the LSE consultation, wrote that a shorter trading day would “improve flexibility for employees and would help to attract a more diverse range of individuals to enter trading floors.”
They added that excessively long hours are a contributor to mental-health issues in the sector.
Last November, the two professional bodies had proposed that European exchanges and trading venues cut 90 minutes from their trading day. This was due to the concentration of liquidity in the first and last hours of trading as well as the short time window between corporate news releases and the market opening. They also advocated for the need to improve the work-life balance and diversity at financial firms.
Other stock-exchange groups are currently conducting their own assessment. However, Euronext is sceptical, with its chief executive Stephane Boujnah having warned that a shorter trading day could damage liquidity. Its consultation which was launched in March, has recently been extended to June 30 due to Covid-19.