Should the stock market never close?
ft.com
ft.com
So maybe there could instead be a chill stock exchange which is open for just two brief 15-minute windows, one in the New York morning and another in the evening.
It's not really clear that it serves any societal purpose to have trading all day long. It's just a lot of traders super glued to the news and trying to react instantly. And trades take a couple of days to settle anyways.
I'm really curious if anyone can point to important economic efficiences that would be lost if trading was restricted to two 15-minute windows per day.
It removes friction from the market since it gives time to line things up between market participants.
For example if some assets are on loan, it gives time to the people who were borrowing it to find some other market participant to borrow it from.
https://www.bloomberg.com/opinion/articles/2024-02-28/tradin... was a good explainer
Still, I agree that we need to think again about the focus on hyper liquidity. When I see high speed trading, I feel like it's just an endless competition to steal the bid-ask spread from the suckers who are actually trading.
With the current system there’s only a 27% chance that global news arrives when the world’s most important market is open. It’s practically a completely arbitrary number.
So it might be more fair to everyone to either reduce the number to a minimum, or expand it to as close to 100% as possible.
That you have ample time to digest the news from overnight to trade in the morning, and ample time to digest the news from the day to trade at the end of the day.
There's definitely importance for prices to change daily in response to news. I'm questioning any economic or societal need for prices to change by the second/minute, or even hour, in response to news. All it does is funnel some extra profits to professional traders who watch the markets and are subscribed to every news alert, and disadvantage everyone else who just stays on top of industry/market news like a normal person.
it would probably change the value/ reaction to information assymetry which might be good or bad. It would probably decrease opportunity for me to buy stocks i like at a lower price by sitting on bids and waiting for the random walk to push the price down to my bid just due to noise.
Typically, more shares trade in the first hour than during any other, as orders placed when the market was closed are processed.
This would make for a fairer market than what we have now.
> This would make for a fairer market than what we have now.
It would also give people time to think, instead of pushing them to automated trading based on NLP processing of headlines.
The IEX stock exchange was made to make longer term trade more attractive but I think the vision was too limited to have the impact they were hoping to have.
On the buy side, you can place and withdraw bids at any time, and when the auction starts, those bids are part of the auction. This works as a price signal to draw sellers in, or convince them to withdraw.
The price paid for all the stock is pooled, and each seller gets a share proportional to what they sold.
This would eliminate HFT (good), and should allow for price discovery and other useful market forces to do their work. It would chill out the market and dispose of the heady cocaine-fueled paper-chasing casino aspect of it. The market would converge on a daily agreement about the stock price of that company, without all the random walks and HFT coin shaving, which is not economically productive behavior.
I know it is quite common, but I always found it strange that The (Free) Market™—where stocks are traded—was itself a commercial entity and traded on the same exchange(s) that it ran.
Any particular stock market is not "the" market or "the free" market. It's just one of many. There are lots of stock markets, and there are lots of other markets, from commodities to real estate etc. Companies sometimes list on multiple stock markets.
And markets are generally private entities, though they sometimes involve government regulation around information accuracy, transparency, antitrust, etc. This isn't something unique or peculiar to stock markets.
And sure they can trade on their own exchange. It's really not any different from how you can put "Google Trends" as a search topic into Google Trends.
Then again, it may create some jobs if they have to hire night and weekend staff.
It's actually kinda nnoying here in Australia that I have to wait for the NASDAQ to open, which means staying up later than I'd like on occasion!
I use an Australian online broker.
They do offer pre-market orders, however they do say:
> However, a limited number of buyers/sellers and volatile prices can make pre-market trading risky for novice investors.
Am I am solidly a novice investor LOL :-)
And no this is different then pre market or after hours. It's just a standing order to execute at certain price conditions, it'll happen automatically by your broker or timeout.
why would a market open for long periods cause liquidity issues? I would expect that it _increases_ liquidity, as there'd be a trade available at all times, rather than just business hours.
only because they're not knowledgable enough. And if they're an amateur, they will lose to the pros - it's a shark infested trading market out there.
I don't see any problems with that.
The stock market should be an equalizer, but this will mostly benefit buy-side firms that have enough headcount or the infrastructure to support 24/7 trading.
Just about all market moving company and government economic news is announced after hours when the market is closed.
As I understand it, most company earnings are released after hours and many important press releases are held until the market has closed to allow the news to be “digested” offline
Edit: During the Internet bubble around 1999/2000 several markets extended their opening hours by a few hours. Later, after the bubble had burst, they went back to the old opening hours.
Assets which have continues liquidity have more utility for owners. Not only can markets instantly digest new information in a way that is fair, but also when there is no information and prices are stable, participants can make decisions for their own personal objectives at the very moment it’s most relevant to them. Imagine you can sell a few shares of your Nvidia holdings at midnight on Friday and it funds your Paypal card you swipe a few seconds later at the nightclub? There is absolutely no technical downside to expanding trading hours.
HFT and electronic markets overall have massively decreased the transaction costs within asset markets, we are talking multiple orders of magnitude.
Unfortunate HN is infiltrated with a large contingent of technically literate people who are completely economically illiterate, likely due to a systemic problem with western education system. For this reason they believe nonsense like markets are unfair, HFT is a zero sum arms race, highly regulated restricted auctions is a good idea, capitalism is evil, landlords are evil, governments are good and protect the people. All of which are completely idiotic beliefs that can only come from failure to have been taught economics and read history.
Obviously stock markets can go 24/7 and it a strictly good thing.
On my side: all the content is available & no pop-ups.
The market for assets would be more efficient if we tokenize the assets. Then they can be transparently traded according to fixed rules. No opening times, no downtimes, no questions about how the system works.