The Debate: Should the London Stock Exchange open 24-hour trading?
Could 24-hour trading revive the London Stock Exchange? We get two market experts to go head to head in this week’s Debate.
YES: Extending trading hours could attract fresh capital and relevance to London
The FTSE 100 may be at record highs, but don’t be fooled. This isn’t a comeback – it’s a momentary cheer on a slow downward spiral. Beneath the surface, London’s stock market is in a deep bout of depression, with more companies leaving than joining and a steady stream heading for the US every week.
While not a fix-all, 24-hour trading is exactly the kind of innovative action we need to stay competitive and keep our best businesses listed in London.
Traditional trading hours are no longer fit for purpose. Crypto trades 24/7, US exchanges are moving towards 22-hour days and a new generation of investors – shaped by constant access through the digital economy – expects the same from global stock exchanges. If the London Stock Exchange wants to reclaim influence and shed its status as a laggard, it must lead with bold, forward-looking reform.
Some argue the tech investment is too steep, or that overnight volumes are too thin. But that’s a short-term view. These concerns are valid and should be factored into a phased rollout but the long-term rewards far outweigh the risks. Extending trading hours could transform London into a global hub for round-the-clock equities trading, attracting fresh capital and relevance.
But 24-hour trading alone won’t solve everything. The government must step up too. It could start by scrapping stamp duty on shares, incentivising long-term UK stock ownership through targeted tax breaks and scrapping the Cash ISA to get more people investing in UK companies while building long-term wealth.
We need radical moves, not half measures – or we risk falling further behind.
Michael Healy is UK MD of investment platform IG
NO: Where could this end? Do we need a 24-hour country?
No, the London Stock Exchange should not be open for 24-hour trading. Calls for longer trading days have grown over recent years, especially since crypto markets operate 24/7, attracting a younger, more mobile crowd, and as the UK seeks ways to make the London Stock Exchange more competitive. It’s become a regular occurrence for high-profile firms to defect to New York or dual-list.
But transitioning to a 24-hour trading regime would mean rethinking market structure and trading behavior. It would involve significant changes to technology across the financial system, as well as regulatory obstacles and hurdles to clearing and guaranteeing trades, and, of course, it would impact liquidity.
In the 24-hour trading scenario, the market would be open 24 hours. However, traditional banking and collateral systems would still operate on fixed schedules, which could limit fund availability outside normal business hours. This adds risk to trading and settlement. Unless we change these industries to 24 hours too? Where could this end? Do we need a 24-hour country?
24-hour trading would also create significant liquidity lulls, which could result in wild volatility as traders react to global developments amid thin liquidity.
Then there is the timing of earnings and economic data releases, which are often done ahead of the market open to avoid bouts of panic. This scenario wouldn’t be possible in a 24-hour trading regime, adding to trading risk.
Finally, there is the cost element. Extending hours will naturally increase costs significantly, with more staff required, changes to the system and increased compliance.
While there is a clear need for the UK government to rethink regulation surrounding the London Stock Exchange, extending trading hours is not the way forward.
Fiona Cincotta is a market analyst at City Index
THE VERDICT
Amid pressure to up its game, the London Stock Exchange Group is looking into extending its opening hours, with 24-hour trading not off the table, according to reports. But would this be a shot in the arm for London markets, or just a pain in the derriere for traders?
Open just 8am-4:30pm, London’s markets currently barely make a living worthy of Dolly Parton, yet alone the national economy, and Mr Healy is right to push for more. London is in need of ambition, and extending trading hours embodies the can-do spirit the country is in need of.
That said, there is rather a big difference between extending hours and a 24-hour market, and Ms Cincotta is right to have reservations. Traders may be used to (and duly compensated for) long hours, but there is a whole ecosystem (bankers, lawyers, accountants, compliance officers) that would also have to be awake for 24-hour trading to work. And that’s of course before we get to the real victims: financial journalists. For Morning Wire then, this is a no brainer: let the City sleep!