London Stock Exchange begins consultation on shorter equity trading hours

Following calls from the industry to reduce trading hours in Europe, the LSE has started a consultation and is accepting responses until the end of January.

The London Stock Exchange (LSE) has initiated a consultation exploring a possible reduction in market hours, after market participants called on equity trading venues to examine the issue last month.

In the consultation, LSE outlined that the move could encourage staff diversity, concentrate liquidity in a shorter time frame, and positively impact mental well-being of staff following broad support from trade and industry groups.

On potential impacts of shorter trading hours, LSE said it would require changes to regulatory reporting and commitments for trading on systematic internalisers and OTC, while reducing the important overlap with US and Asia trading hours. LSE also highlighted that to maximise the potential benefits, all main European trading venues would have to agree to shorter hours.

Market participants have been given five options in the consultation on the possible changes to equity trading hours, including between 08:30 – 15:30, 08:30 – 16:00, 09:00 – 16:00, 09:00 – 16:30, or to maintain the current time of 08:00 – 16:30 London time. The consultation will close on 31 January 2020.

European markets are open for business for 8.5 hours a day, much longer compared to the US and Asia where markets are open for 6.5 and 6 hours respectively.

The Association for Financial Markets in Europe (AFME) and the Investment Association said in a letter to the LSE last month that longer hours have impacted traders’ mental health and well-being. It has also been identified as an obstacle in recruiting more diverse talent.

“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,” said April Day, head of equities at AFME. “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.”