Like it or not, I think the Singapore Exchange will be extending its trading hours, sooner or later. This despite the fuss remisiers and some market players are making in response to a reported mass dialgoue between SGX and its stakeholders earlier this month concerning the scrapping of the current lunch break, to make it one continuous session from opening to close.
I say go for it, SGX, no matter what the remisiers n like-minded but parochial thinking people say.
After all, didn't all sorts of dire nay-saying abound when the SGX predecessors decided to reopen the stock market on the 3rd day of Chinese New Year (in line with all other businesses), when it was the tradition for brokers to go back only on the fourth day? And despite all the gloom and doom, our stock market has gone from strength to strength since then.
In fact, why stop at scrapping the lunch break? SGX, under the new CEO, should be bolder. Why not make it 24/7 trading? That way anyone in the world can take a punt on the SGX in their own time zone. Also, no need to trouble the tradition-bound remisiers.
Since our SGX system is an order driven, order matching system and since any investor can trade on SGX via the Internet, I don’t see why the system shouldn’t be used to the max, instead of closing down for week-ends and the better part of every day. This is especially since SGX is going to invest another $250m to supe up the system even more…
As for the k-p-k-b behaviour, these grousers should note that since Jan 11, SGX has already extended its derivatives trading hours till 1am Singapore time the following day for contracts with T-plus-one sessions to accommodate growing international demand for Asian equity derivatives.
The longer trading hours enable traders to respond to market movements and manage their risks across global time zones, including after the close of European equity markets.
Contracts which enjoy the extended trading hours include the Nikkei 225, MSCI Taiwan, MSCI Singapore and S&P CNX Nifty (India) index futures.
With longer, if not 24/7, trading hours, volume is bound to rise, though by how much no one can say till it is put to the test. Also, vloume would depend on what products are available on SGX equities platform.
Asian exchanges, including Sout Korea and Taiwan, that have dropped their lunch-time trading breaks have seen daily volumes rise between 8 per cent and 15 per cent, observers say.
Critics of extended trading hours point to China and Hongkong which have shorter trading hours than Singapore but are among markets in the region enjoying the highest volumes.
Such critics however overlook the fact that China and Hongkong have a far larger critical mass of investors than most of the markets in the region. And markets that have longer hours and desirable products will take nibbles from markets with the critical mass but shorter trading hours. Geddit?
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