The New York Stock Exchange surveyed a number of market participants in March for their views on day and night trading.
The results of the survey are not yet available and the New York Stock Exchange is not able to specify when they will be available.
Currently, the Toronto Stock Exchange, the New York Stock Exchange and the NASDAQ share the same trading hours, i.e. 9:30 a.m. to 4 p.m., Monday to Friday, excluding statutory holidays.
It is now possible to enter orders online outside market opening hours. Trading before the opening and after the official closing of the markets, however, involves risks (price spreads, volatility, liquidity, etc.) due in particular to the lower number of participants during extended trading hours (between 8 a.m. and 9 a.m. 30 hours before the stock markets open and from 4 p.m. until 8 p.m. after the markets close).
Could the stock markets possibly remain open day and night, at least during the week?
PHOTO YUKI IWAMURA, BLOOMBERG ARCHIVES
Currently, the Toronto Stock Exchange, New York Stock Exchange and NASDAQ share the same trading hours.
“It’s a bit inevitable that we’ll get to this point one day,” believes Daniel Ouellet, portfolio manager at Groupe Ouellet Bolduc, affiliated with Desjardins.
However, he wonders whether the volume of transactions spread over 24 hours would lead to more problems of market manipulation.
I see more disadvantages than advantages to a market open 24 hours a day. I like the current operation allowing economic data and financial results to be published outside trading hours.
Daniel Ouellet, portfolio manager
The stock market losing popularity
Changing current trading rules for publicly traded stocks simply wouldn’t be a good idea, according to Louis Vachon, partner at JC Flowers & Co, a New York investment firm specializing in financial services.
“If we want to increase the liquidity and depth of the market, I don’t think that’s the solution,” said the former CEO of the National Bank.
Stock markets are facing several challenges at the moment. The biggest being that there are more companies which close their capital and leave the Stock Exchange than companies which decide to make the jump to the Stock Exchange. I would rather try to understand what explains this situation. 24/7 is not what will attract more companies to list on the stock exchange.
Louis Vachon, partner at JC Flowers & Co
He points out that the work of members of senior management of a company whose shares are traded 24 hours a day, 7 days a week, would become more complex in terms of information management and discourse.
“It’s already complicated with social media. You would add another layer with 24/7 negotiation. Indirectly, this would further discourage companies from becoming public companies,” he explains.
Yes, cryptoassets trade 24/7, but is this an example worth following? he asks.
“We live in a society with an information surplus. People spend all their time taking in information on their cell phones and social media, and they don’t have enough time to digest this information. This applies as much to the small investor as to the CEO of a company,” says Louis Vachon.
PHOTO BRENDAN MCDERMID, REUTERS ARCHIVES
A man looks at his cell phone as a screen displays trading information on Truth Social shares outside the Nasdaq Market site in New York.
“If you spend all your time trying to absorb information without leaving time to digest it, you risk indigestion. There is an expression that says: you know the price of everything, but the value of nothing. Taking a break allows you to properly assimilate the information, analyze it and understand what is happening. In any case, it is already possible to trade after-market on futures contracts in particular. »
For algorithms
Voicu Valentir, president of the Cavaliro Group – a Laval investment firm – is of much the same opinion and does not see much interest.
“This would perhaps be especially good for investors using algorithms to trade by computer. »
This former market maker adds that companies which publish their quarterly results outside of trading hours do so in particular to give investors time to properly digest the information. “Will authorities have to force halts in securities trading every time a company releases news? “, he asks.
Having the time to read the press releases in order to fully understand the figures and realize whether it is good or bad news is important, in his opinion.
PHOTO ANGELA WEISS, AGENCE FRANCE-PRESSE ARCHIVES
Employees at the New York Stock Exchange keep their eyes glued to stock indexes during their shift.
Portfolio manager Philippe Hynes, of the Montreal firm Tonus Capital, agrees and would even like a reduction in trading hours.
The idea of doing research and analysis well, and being able to be timely on purchases and sales, requires being active and present when the markets are open. With 24 hours a day, it would become difficult, if not impossible.
Philippe Hynes, portfolio manager
It is already possible to make transactions before opening (pre-market) and after closing (after hours) markets on American securities, he adds.
“So would that really change anything?” Probably this would increase the volume of transactions outside of current hours, because on the pre-market, often there is very little volume. But I would like it better if the markets were open less often. This would allow investors to do more fundamental research and less watch stock prices rise or fall by 5 or 10 cents. »
Philippe Hynes ends by recalling that the American investor Warren Buffett has already said that he invests on the principle that the stock market could close today and not reopen until five years later.