Asia’s Exchanges Opening Longer
In a bid to attract western investors, increase access and earn more fees exchanges in Asia are keeping their doors open longer. They are extending trading hours, offering T+1 trading sessions and are now even reducing and even considering eliminating the coveted trading lunch break so often found in Asia.
Only this week the derivatives arm of the Singapore (SGX) announced the extension of the T+1 session to 2am and a reduction of its lunch break by 30 minutes. The cash segment of SGX is open from 9am to 12:30pm and then from 2pm to 5pm. An article published July 25 in Today said that Magnus Bocker of SGX is considering dropping the trading break all together. “We need to cater to a larger and broader international market.” the article quoted him as saying.
Tokyo is getting on board as well. The Tokyo Stock Exchange (TSE) released a Discussion Paper “Regarding the Extension of Trading Hours” citing the “remarkable changes” in the electronic trading industry. That bourse is open from 9am to 11 am then again from 12:30pm to 3pm. They are welcoming feedback until September 10 on whether or not to proceed. The Tokyo Commodity Exchange too plans to open longer. It will extend its T+1 trading session from 11pm to 4am from late September.
In mid-December last year the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) announced that trading would begin at 9am from 9:55am.
But can these extra trading hours improve trading volumes much? Asia’s exchanges tend to be traded locally and when the locals go home liquidity dries up. Moreover, investment banks and large brokers have a rolling book and simply pass orders to the respective Asia market where local specialists and market specific algorithms will trade these names with greater efficiency. You could argue that the longer hours will offer hedging opportunities when macro events are announced out of the west that tend to see Asia gap up or down when trading opens here. But other than that the costs bourne by the industry to support the extended hours can’t be justified.
The Philippine Stock Exchange doesn’t offer any Direct Market Access and is open only 2 hours and 30 minutes from 9:30am to noon. The bourses in Vietnam also don’t offer DMA and are only open for 2 hours from 9am to 11am. Maybe they know something that the rest of Asia’s exchanges don’t.