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Breadcrumb Links FP Finance Cryptocurrency
Longer hours are unlikely to be welcomed by professional traders who say the current regime is already punishing
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Financial Time
Eva szalay
Release date :
November 18, 2021 • 29 minutes ago • 4 minutes read • Join the conversation The Euronext exchange in Paris, France, November 10, 2021. Photo by Benjamin Girette / Bloomberg Files Article content
Uninterrupted trading in the cryptocurrency markets is pushing traditional asset traders to work longer – in a reversal of pre-pandemic campaigns by banks and fund managers to shorten exchange hours.
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Since March of last year, Bitcoin and other digital assets have entered the world of professional investors, with conservative pension funds and deposit banks following family offices and hedge funds in the crypto market. risky but growing rapidly. Last month, Bank of America acknowledged that cryptocurrencies, which are now worth $ 2 trillion, had become too important to ignore.
As these blockchain-based digital assets have become more closely tied to the stock and currency markets, their influence over them has also increased. And a potential impact is on trading times.
In early October, 24 Exchange, the Bermuda-based currency and cryptocurrency exchange, filed an application with the United States Securities and Exchange Commission for a license to operate a national stock exchange. securities, with the aim of becoming the first platform where stocks can be traded 365 days a week.
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“Once cryptocurrency trading [became mainstream], people have gotten used to its unlimited availability, so I think they will expect such 24/7 trading availability for other assets, ”said 24 Exchange Managing Director Dmitri Galinov.
Bitcoin and other digital currencies are trading nonstop, fueled by the endless hum of powerful computers in vast data centers. Retail investors can buy and sell digital coins anytime during the global day, seven days a week. In contrast, stock exchanges only allow trading for fixed hours five days a week, and currency trading breaks off on weekends, in a nod to the human element of finance.
But Galinov, a veteran of e-commerce in stocks and forex, is now betting that large investors will want to trade stocks and currencies on weekends, just like their retail counterparts – in a move that would turn the markets off. currencies a 24/7 activity, and extend the resilience of the people who participate.
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“Customers are already asking: why can I trade Bitcoin but not Tesla after market hours or on a weekend? he says.
However, longer hours are unlikely to be welcomed by professional traders who say the current regime is already punishing.
In January last year, fund managers and banks campaigned to cut trading hours for European stocks, arguing that the current 8.5-hour daily window for trading is inefficient and antisocial. The exchanges disagreed and rejected calls to align European business hours with those in Asia and the United States, where stock traders must operate within a 6.5-hour window. .
“Once
, people have gotten used to its unlimited availability, so I think they will expect such 24/7 trading availability for other assets “source =” Dmitri Galinov, Managing Director, 24 Exchange “/]
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But opening longer is not yet on the agenda either. Sarah Mound, head of communications for Euronext – which manages exchanges in Paris, Amsterdam, Dublin, Brussels, Lisbon and Oslo – said the company had no plans to extend trading hours to cover the week -end.
Cboe, the global stock operator, also says it will stick to its current hours, with the exception of its EDGX Equities Exchange where the company brought business hours up to 4 a.m. ET in March, down from 7. hours ago.
Currency markets can move faster. Cryptocurrency exchanges offer exchanges throughout the weekend for their retail customers, allowing them to trade Bitcoins for the dollar even when currency exchanges are closed. This means that during the weekend, crypto exchanges are exposed to the risk of large movements in the currency market when the forex markets open – prices might not match the rate at which they offered services to their clients.
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“The Friday night prices offered by brokers … do not reflect the reality of the market,” warns David Mercer, managing director of LMAX Group, the institutional exchange and crypto exchange operator. “As the cryptocurrency markets gain momentum and there is increasing convergence with FX, crypto will continue to push traditional asset classes to innovate. “
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A tipping point is far away, however. According to a report by digital infrastructure provider Copper, the majority of cryptocurrency trading takes place during the week during market hours, with just 35% of transactions taking place on weekends and outside of office hours.
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Cryptocurrency markets are also much more volatile than traditional markets, which explains the demand for non-stop hours as investors often have to exit positions immediately. In contrast, the forex markets and stocks are much more sleepy overall, and aside from extraordinary occasions, there are few events that trigger the type of price movements that are normal for digital coins.
Ultimately, however, as cryptocurrency exchanges and brokers grow, their activities could cause the big banks to extend their trading hours for currencies. Chi Nzelu, head of e-commerce macro at JPMorgan, says that for now is unlikely, but that could change if digital exchanges expand.
“Demand is currently limited in the institutional space,” he observes. “We always stay close to clients so that we can adapt as trading habits and preferences change.”
This article has been modified since the first publication to correct the 24 Exchange home database
© 2021 The Financial Times Ltd
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