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London Stock Exchange Considers Proposals for a Shorter Trading Day

London Stock Exchange Considers Proposals for a Shorter Trading Day

(Bloomberg) -- London Stock Exchange Group Plc started asking market participants if they want the bourse to be open fewer hours, signaling it’s open to an argument driven by changing trading patterns and calls for a better work-life balance.

LSE called Tuesday for feedback on five proposals, ranging from keeping the current 8 a.m.-4:30 p.m. trading day to shortening it by as much as 90 minutes. All of the options besides the status quo propose a later start time. Trading firms, asset managers, regulators, issuers and individual investors have until Jan. 31 to respond.

Last month, the Association for Financial Markets in Europe, which represents trading firms and banks, and the Investment Association, the U.K. lobby group for asset managers, asked exchanges in the region to consider a shorter day. Potential benefits could include better gender diversity and an ability to retain people with family commitments, they said.

However, there are also structural factors at play. LSE Chief Executive Officer David Schwimmer has pointed to the trend of investors waiting to closing auctions to buy and sell, rather than making trades across the course of the day. Some market watchers link that phenomenon to the growth of exchange-traded funds that rely on end-of-day prices.

The LSE’s proposed options for shorter trading hours are:

  • 8:30 a.m. - 3:30 p.m., London time
  • 8:30 a.m. - 4 p.m.
  • 9 a.m. - 4 p.m.
  • 9 a.m. - 4:30 p.m.

It’s a far cry from two decades ago, when Europeans were lengthening their hours to straddle the U.S. and Asian trading days. The LSE said Tuesday that losing any of those overlapping hours may be a problem for traders based in those markets. It also said a coordinated approach by all the big European exchanges would probably be required for any change to be effective.

Read More: in 1999, London, Frankfurt Extend Hours and Synchronize Trading

However, LSE also noted the “broad support from the market” for a shorter trading day, and also said liquidity would be more concentrated in fewer hours.

Galina Dimitrova, director for investment and capital markets at the Investment Association, welcomed LSE’s consultation.

“We need to call time on the long-hours culture, which is detrimental to diversity and mental health, and inefficient for the markets,” she said.

The LSE also asked participants more than 20 other questions. Besides the implications of shorter hours, the topics ranged from the liquidity of small-cap securities to the effect of MiFID II rules on research. It also sought opinions on whether the timing of its intraday auction could be changed to boost liquidity.

To contact the reporters on this story: Viren Vaghela in London at vvaghela1@bloomberg.net;Silla Brush in London at sbrush@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Keith Campbell

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