Exchange operator CME Group Inc. said it opposes Trump administration’s plans to slash trading hours to quell extreme volatility triggered by the Coronavirus pandemic, which so far has shaved off nearly a third of the global market cap.
CME made the announcement after Mnuchin spoke with banks and exchanges, including the New York Stock Exchange, urging them to adopt the proposal. However, the idea of shorter hours caught the world’s largest futures exchange by surprise.
“We were quite surprised to hear Secretary Mnuchin say he is coordinating with the New York Stock Exchange on possible shortened trading hours, even though he has not reached out to all cash equity and futures markets including CME Group and Nasdaq,” said CME Group Chairman and CEO Terry Duffy.
CME CEO added that a reduction of US trading hours would give an advantage to other jurisdictions in similar or equivalent time zones to expand their trading hours. Instead, Duffy suggested amending Circuit breakers in US equity markets to include only 7% and 13% downside limits, rather than the current 7%, 13%, and 20% levels.
“Shorter hours make no sense,” he concluded.
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Markets to stay open, Mnuchin says
NYSE’s parent company, Intercontinental Exchange Inc, also confirmed that all of its platforms were operating normally with no immediate plans to shorten the trading day.
Treasury Secretary Steven Mnuchin said earlier today that it was crucial to keep the US markets open despite chatter of imposing trading holidays that advocates say might help to curb volatility. However, he noted that shortening trading days may also be needed at some point due to the unpredictable and violent moves in stock benchmarks lately, which reflects a new regime of uncertainty fostered by the infectious disease that was first identified in China.
“We may get to a point where we shorten the hours, if that’s something they need to do, but Americans should know that we are going to do everything to make sure that they have access to their money at their banks, to the money in their 401(k)s, and to the money in stocks,” said Mnuchin.
Wall Street’s current operating hours of 9.30 am to 4:00 pm are among the most moderate trading sessions in the world, at 6.5 hours. Europe’s markets are open for 8.5 hours and Asia just six hours, by comparison.