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FLASHBACK FRIDAY: The Downside of an Earlier NYSE Opening

Flashback Friday sponsored by Instinet

Traders Magazine Online News, March 16, 2018

John D'Antona Jr.

Ding ding ding.

That’s the sound of the opening bell at the New York Stock Exchange, which greets millions of people each and every morning either on CNBC, CNN or a multitude of other television networks as well as on the Broad Street trading floor to signify the equities trading markets are officially open. The time is 9:30 EST. It’s time to trade.

But there was a time back when the NYSE when it considered changing its opening time – perhaps moving it back 2 hours – to promote more trading opportunity for investors and help the exchange make more money and grab extra market share. But against the backdrop of protest, the NYSE never changed its opening bell or trading time.

But has it always been that way? And how did the current trade evolve or come to be?

James Angel, Georgetown

No, trading hours weren’t always like this, said James Angel, professor finance at the McDonough School of Business at Georgetown University. In a conversation with Traders Magazine he confirmed that the NYSE’s trading hours have change over time. Current regular trading hours for all major U.S. exchanges have been in place since just 1985.

“They have definitely changed over time,” Angel began. “The NYSE used to be open on Saturdays, but stopped that long ago. Also, during the paperwork crunch of the 1960s they closed early on a number of days to catch up on the volume.”

Looking way back to 1871, NYSE trading hours of continuous trading fluctuated, kicking off at 10 a.m. Eastern Time and ending between 2 and 4 p.m. Monday through Saturday. Then in May 1887, hours change up a bit to 10 a.m. to 3 p.m. Monday through Friday; 10 a.m. to noon, Saturday.

Saturday trading ended in 1952.

While Georgetown’s Angel said he hadn’t heard of any movements to change hours lately, he added that he wouldn’t be surprised if the idea comes back up. 

“Now that the exchanges are more highly automated, it is cheap for the exchanges to stay open later,’ he said. “Indeed, many of them keep the computers on until 8pm. However, not much volume takes place after 4pm because most people don't want to trade outside regular trading hours.  However, if regular trading hours were expanded (perhaps to 5pm), there would likely be some additional volume coming in as a response to macro announcements during that time and from retail flow on the west coast.  So, the exchanges would see higher total volume at negligible increased cost.”

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