The Association for Financial Markets in Europe is calling for a shorter working day for the London Stock Exchange and other European markets in a bid to address mental wellbeing and improve diversity.
Traders in the investment management and banking industries are calling on the London Stock Exchange (LSE) and other European trading venues to review trading hours across Europe in a bid to improve culture, diversity and wellbeing on trading floors, and create more efficient markets.
In a joint letter to the LSE and other European trading venues, the Association for Financial Markets in Europe (AFME) and the Investment Association (IA) have requested a review into equity market opening hours across Europe, with a view to shorten operating hours from 8am – 4.30pm, to 9am – 4pm GMT.
They say a reduction of 90 minutes in European markets would create more efficient markets, benefiting savers and investors.
They state, for instance, that the first hour of trading “often attracts little liquidity and subsequently is a more costly time to trade”, while the final hour attracts around 35% of total daily volume.
“Shortening the hours would concentrate liquidity leading to more consistent trading costs and provide greater time for traders and the market to digest corporate announcements,” says AFME.
The current opening hours for major trading venues in Europe are some of the longest in the world at 8.5 hours, when compared to other global markets, such as the US (6.5 hours) and Asia (six hours), with traders expected to start their day long before markets open and close.
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AFME says this long hours culture impacts on traders’ mental health and wellbeing and has also been identified as a key obstacle in recruiting and retaining more diverse talent, in particular for those with family or caring commitments.
April Day, Managing Director, Head of Equities at AFME, said: “AFME and the IA are currently in discussions with the major European cash equity exchanges to explore a reduction to trading hours.
A shorter trading day would not only improve market structure but would also go a long way towards building a more diverse trading floor and fostering better mental health.
Equities trading risks lagging behind a wider financial services industry push for more diversity and inclusion unless the long trading day is tackled by an industry-wide approach.”