ASX Group is examining its traditional trading hours in response to global changes and may extend them, says Richard Murphy, the ASX’s general manager of equities.“The time of trading hours being static is a thing of the past,” says Murphy.
The ASX’s “normal trading” hours, with the exception of public holidays, are between 10 a.m. and 4 p.m. Monday to Friday Australian eastern standard time.
“As the world globalises and there is potentially 24-hour trading in mainstream stocks, market hours will have to be re-examined,” says Murphy.
He did not give an indication as to what trading hours the ASX was considering.
But Murphy says the ASX will be open minded as to what stocks will trade on its market in the future.
“Exchanges around the world are thinking much more broadly about securities that are not solely quoted on their exchanges,” says Murphy, speaking on the sidelines of the Fiduciary Investors Symposium conference organized by Conexus Financial Ltd., publisher of I&T News.
The average size of ASX trades “in the last few days” has been $5,500, says Murphy. That is reflective of a global trend.
“The trend is down, down, down, all across the world,” says Murphy.
He says about 25 percent percent of daily trading on the ASX are by high frequency traders. High frequency traders use mathematical formulas to trade millions of stocks within seconds to try and take advantage of minute differences in share prices.
If high frequency trading comprised as much as 80 percent of the ASX’s daily turnover that may hinder price discovery and impair long-term capital development, says Murphy.
There is also a debate on whether a minimum trade size should be imposed on investors who want to trade stocks in so-called dark pools
Dark trading pools enable buyers and sellers to match their trading needs anonymously, minimizing news of the trade getting out to the market and hurting the seller’s return.
“Why does a $5,000 trade need to be in a dark pool?” asks Murphy.