24x7 stock market? What SGX President, CME Group’s APAC MD and Eurex Senior VP said

Should stock markets remain open 24x7? The question was raised at the Global Securities Markets Conclave 2.0, hosted by the International Financial Services Centres Authority at GIFT IFSC, where representatives from exchanges and market participants discussed the feasibility of round-the-clock trading.

Participants including Michael Syn, President at SGX Group, Russell Beattie, Managing Director for APAC at CME Group and Stefan Ullrich, Senior Vice President at Eurex, said that while 24-hour trading is technologically feasible, but there is currently limited demand among market participants for such a model.

Singapore’s SGX trades for more than 21 hours a day, five days a week. The Chicago Mercantile Exchange operates nearly 24 hours on its Globex trading platform. Eurex also trades for more than 21 hours a day, five days a week.

In India, stock exchanges NSE and BSE operate five days a week from 9:15 am to 3:30 pm IST, with a pre-open session from 9:00 am to 9:15 am and a post-close session from 3:30 pm to 4:00 pm. Exchanges at GIFT IFSC trade for about 21 hours a day.

Equity settlements were earlier conducted on a T+4 basis. In some markets such as China, settlement is conducted on a T+0 basis.

On whether 24x7 trading is an optimal model for price discovery, Russell Beattie of CME Group said the exchange has operated on a 23x5 basis for many years and expects that to remain unchanged. He added that weekend access could be introduced alongside existing hours.

“So the markets would close for approximately two hours for maintenance on a Saturday morning Asia time and then it will be 100 per cent pre-funded and any trade done over the weekend will be settled on a Monday. It would not yet be 24x7; it would be 23x5 plus a weekend,” Beattie said.

Beattie said it is important for the underlying physical market to be open to support such trading. He gave the example that if Nasdaq were to introduce weekend trading, CME could add an equity index product to support it. “But we would not be supporting equity index first while the cash market is closed,” he said.

Stefan Ullrich, Senior Vice President at Eurex, said it does not make sense to extend trading hours without sufficient demand. “It is no coincidence that some news may come out of regular trading market hours but everybody should have a chance to think first,” he said.

Michael Syn of SGX Group said the exchange primarily serves institutional participants and does not operate a direct-to-customer model. SGX connects to clearing members, who in turn serve end customers, he said.

“What clearing members and customers have said to us is we do not need and we do not want 24 hours a day. Because, for instance, you may be managing 1,000 funds in New York. During the day, you execute your products. At the end of the day, you have to allocate, reconcile, do paperwork. This does not help their business or anyone's business,” Syn said.

He added that the underlying structure of end customers does not require 24x7 trading and noted that banks typically do not operate on weekends, citing credit risk within the system.