Shortening market trading hours may lead to improvements in diversity and well-being, but may also damage London's status as a leading financial center, market participants said.
The warning came from money managers, banks and other financial market players in response to a consultation into shortening trading hours on the London Stock Exchange. The exchange launched the consultation for comment in December and received more than 140 responses.
London currently trades from 8 a.m. and 4:30 p.m. GMT. The majority of respondents preferred to work 9 a.m. to 4 p.m., but "reasonable clusters" advocated for 9 a.m. to 4:30 p.m. or 9:30 a.m. to 4:30 p.m. "A minority advocated leaving hours unchanged," a summary of responses published Monday by the LSE said.
Views on the impacts of shortened trading hours were mixed.
"A significant majority of respondents were sympathetic to the arguments that a reduction of market hours could lead to improvements in diversity and well-being," the LSE said.
The LSE cited a response by the Association for Financial Markets in Europe, representing wholesale financial markets, and the Investment Association, which represents U.K. money managers, which said shorter hours "would improve flexibility for employees and would help to attract a more diverse range of individuals to enter trading floors ...The key benefit from shorter exchange hours will be the opportunity it affords to firms to attract, accommodate and retain individuals whose personal circumstances require more flexible working hours." The response added that the "excessively long hours" in trading markets play "a major contributory part in generating and perpetuating" mental health issues.
However, the "vast majority" that supported this view agreed that harmonization across European exchanges and trading venues would be necessary for improved diversity and well-being to be realized, "given the pan-European nature of many trading roles in the financial industry," the summary said. Respondents said institutions themselves could do more to promote diversity and well-being through initiatives such as shift work.
Harmonization would also be needed as moves by any exchange to shorten its trading hours in isolation may lead to dislocation and additional market complexity.
Further, some respondents warned that shortening U.K. trading hours may be detrimental to London's position as a global financial center.
The LSE noted in its summary that other European exchanges and trading venues are consulting on market hours. "We await their public findings as these will be an important factor in considering any potential changes to our trading hours, given the indicated preference for harmonization."
The exchange will continue to engage with industry bodies and other participants on the topic, including discussions about working remotely, which may have resulted from the current coronavirus lockdown. The intention is for the summary "to assist the progression of discussions with all stakeholders and, where it appears that a strong consensus exists, to set out the proposed next steps," the LSE said.