Why Do Markets "Close"?
episode
DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing
18 min
4 speakers
5 chapters
transcribed 1 month ago
Transcript
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Transcript generated automatically by AI and may contain errors.
What is the main topic discussed in this episode?
Hey, this is Allie, and thanks for listening to the show. Give us a five-star review where you listen and share this episode with someone who might need to hear it. Now, enjoy the show. Welcome back. Ladies and gentlemen, you're listening to another edition of DIY Money.
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Hi, DIY Money. This is Ambar from Michigan. I'm curious, why does the trading market have hours, like office hours from 8 a.m. or 9 a.m. to 4 p.m.? It doesn't work on it. holidays, like what's the purpose of that? I assume that most trades are carried on by machines, it's automatic. So I don't understand why do we need to have restrictions on when do those happen? Thank you.
Ambar, this is a great question, and there's so much historical context here that we'll try to unpack in no particular order, but I'll summarize it by saying that while trading, you're absolutely right, I would say, I don't know, it's a guess, but 95% of all trades are electronic now, at least, maybe even more, but at the end of the day, Guys like us need a break.
I say when we close. We close in five minutes.
I got reservations at Chili's.
I'm meeting my boys.
Allie asked me this question. I said, well, because we got to go home at some point.
Yeah, I mean, it's been – well, again, I'm going to unpack a lot of different things. So we'll just have a coffee talk, general discussion here. But it's been floated that the major exchanges – New York Stock Exchange, NASDAQ, American Stock Exchange stay open 24 hours or 18 hours or whatever. And these are often member-driven exchanges. Now, New York Stock Exchange ultimately became public. I think they're owned by – ICE, which is the Intercontinental Exchange, I think, which is owned by Euronext. Anyways, it's a whole thing. But there are still members that vote and so forth, and everybody's like, no, absolutely not. And again, the reason is that if and when all of those major exchanges were open – and that's where most of the trading volume happens –
then at 2 a.m., some news could break in China, and all of a sudden, we need to be at our desks placing orders. And that sounds terrible. So to a degree, it all boils down to the professionals in the business being able to go home and take a break. Now, I say all that to say that, in essence, it does trade all 24 hours a day. And the reason I say that is because while most of the trading is happening electronically, there are a plethora of other exchanges that handle electronic trading electronically.
What question from a listener kicks off the episode about market hours?
that basically don't close. In addition, you do have news abroad overseas that is influencing global markets all the time yeah i mean you got the japanese markets you got the chinese markets all of those are open europe opens and we're so interconnected that we could have news that happens you know in china and then we come back and we're up a percent down a percent i mean you you never know so to a degree it doesn't ever close now
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:01–4:11
2
What question from a listener kicks off the episode about market hours?
4:11–7:20
3
Why do major exchanges still keep traditional hours despite electronic trading?
7:20–12:47
4
How would 24/7 exchange hours affect trading professionals and markets?
12:47–15:26
5
Which alternative venues and time zones keep global markets effectively open?
15:26–18:38