Why Stock Markets and Forex Are Not 24 By 7.

With all of the computers and automation out there, why aren’t markets open all day?  It is because of price fixing at the close. Not because traders want a family life.

scrooge

Not one but SIX banks face fines up to $2.4 Billion for shady currency trading.

Here is the list of banks:  JPMorgan Chase, Citigroup,  Barclays, HSBC, Royal Bank of Scotland and UBS.

These banks were caught red-handed with text messages bragging about their shady trades to manipulate currency trading. They talk about the numpty, aka idiot, traders,  Here is a summary of the text messages:

http://www.marketwatch.com/story/have-that-my-son-bravo-chat-logs-from-fx-probe-revealed-and-its-no-boring-read-2014-11-12?page=1

If you want to see the full list of text messages, look at this:

http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/hsbcmisconduct111114.pdf

How do we solve this problem?  Not with fines.

What do all these trades have in common?  They were done at market close.

This problem is not just with Forex trading.  It also involves the stock market.

We solve this by making the markets stay open 24 hours a day, 7 days a week.

Isn’t freedom defined as being able to buy a burger or a stock at 2 AM?

Note: Forex claims to be open 24 hours but each time zone closes at 4 PM locally.

Wall Street Open 24 x 7

Banker’s hours are so 19th Century!  We are talking about stock exchanges being open ALL DAY Monday through Friday!  That is my prediction.

wallstreet24x7

This has several advantages to the general public.

First, I predict that you will be able to buy or sell stock at any time (except weekends)  just like buying a book at Amazon.com.

After-hour trading has gradually increased over the years as stock markets make more stocks available for trade.  Also stock exchanges have experienced mergers and acquisitions involving exchanges in other countries.  So the exchanges are becoming international which requires support for many different time zones.

Secondly, no longer will institutions sneak in sales “at the close” or use “imbalance only orders” to modify the closing price.

Institutions have been using these “at the bell” prices when convenient or they cancel them if they won’t be profitable.  This distorts the market price.

So 24 by 7 stock exchanges are good for the general public but bad for corporations.  So it may be a while before we see them.  Probably after some huge foreign corporation implements them.