Source: Guoshi Direct
Author: Chen Kangliang

Extending trading hours in major global stock markets seems to be becoming a new trend, with exchanges in countries such as the USA and Japan successively hitting the "delay button" recently.

Recently, the New York Stock Exchange announced its plan to extend the trading hours of its fully electronic exchange NYSE Arca for US stocks to 22 hours on each business day, to be implemented after regulatory approval. The extended trading hours will start at 1:30 a.m. Eastern Time in the United States and last until 11:30 p.m. every day. This '22-hour' trading system will apply to all US-listed stocks, ETFs (exchange-traded funds), and closed-end mutual funds.

Currently, the trading hours of the NYSE are from 4:00 a.m. to 8:00 p.m. Eastern Time in the United States. The mentioned extension of trading hours refers to the commonly known pre-market and after-hours trading of US stocks, which are conducted outside of normal trading hours (9:30 a.m. to 4:00 p.m.).

Market officials of the NYSE stated that they are pleased to provide US stock trading services to traders from various time zones around the world, continuing to lead market development.

"Forced" extension of trading hours?

Some analysts pointed out that assets such as cryptocurrencies can already be traded around the clock, 24 hours a day, 7 days a week, attracting a large amount of funds that are unwilling to remain 'asleep' to participate in trading. This trend has brought certain pressure to the NYSE, forcing it to consider extending its trading hours. Earlier this year, the exchange surveyed market participants to understand the benefits of 24/7 stock trading.

Vice President Zhao Qingming of the Institute of Overseas Chinese Information stated in an interview with China News Service that the 24/7 trading of cryptos on the NYSE has had a certain impact on extending trading hours, but the more important reason is that as the global financial integration accelerates, extending trading hours on major stock exchanges is becoming a new trend.

Zhao Qingming pointed out that the current global financial markets are increasingly interconnected, cross-border transactions are becoming more frequent, the demand for global investors to allocate assets across regions and manage risks is significantly increasing. Coupled with the increasingly mature information technology conditions behind trading and settlement, market participants generally hope that exchanges can extend trading hours to increase trading windows and provide investors with more flexible trading opportunities. Countries including Japan and China are also striving to promote this reform.

Multiple countries' stock markets are taking action.

Before the U.S. stock market, the Japanese stock market took action. According to a previous announcement from the Tokyo Stock Exchange in Japan, starting from November 5, 2024, the trading hours will be extended by 30 minutes, with the closing time extended from 3:00 p.m. to 3:30 p.m., increasing the full trading day to 5.5 hours. The Tokyo Stock Exchange emphasized that this move is to adapt to changes in the market environment and the diversification of investor demands, further enhance the convenience for market participants, and improve the global competitiveness of the Tokyo Stock Exchange.

Regarding the Chinese stock market, in August 2023, a person in charge of the China Securities Regulatory Commission answered questions from reporters about revitalizing the capital markets and boosting investor confidence. They proposed studying the appropriate extension of trading hours for the A-share market and the exchange bond market to better meet investment trading needs.

A research report from China International Capital Corporation pointed out that compared to the trading hours of major global stock exchanges, the daily trading hours of A shares are relatively short. Extending the trading hours of A shares will help increase the activity of securities trading, align the A-share trading system more closely with international standards, and have certain benefits for enhancing the internationalization process of A shares.

Analyst Liang Fengjie of Zheshang Securities stated that the trading hours of A shares are generally shorter than those of major overseas markets, including Hong Kong stocks. If the trading hours of A shares are extended, especially delaying the end time of the afternoon session, it is expected to increase the overlap between the trading hours of A shares and Hong Kong stocks, enhance mutual connectivity, benefit the trading of more cross-border products, and attract more international investors to invest in A shares.

Editor/rice