Although modern market makers do not need to generate a profit from every trade, because the combination of bid-ask spreads and the bottom-line return from their overall trading activity is their profit, longer trading hours equate to increased risks that the market maker must cover. In my view, this is one of the most challenging tasks in continuous trading operations.įacilitating liquid trading on a 24/5 basis requires market makers that are capable of supporting liquidity enduringly. Otherwise, the tremendous effort required to enable round-the-clock trading would have been wasted. When you give your connected banks and brokers the option of making certain securities available on a 24-hour basis, you need to make sure you can consistently provide liquidity throughout those extended trading hours. Liquidity is a very visible, core feature of a trading venue if you’re not able to show competitive bid-ask spreads as a trading venue, you lose a key argument for on-venue trading over OTC trading. What about the provision of sufficient liquidity? All this is going on without interruption in the background. Throughout this schedule, we provide immediate client support at all times and we maintain continuous monitoring of trading activity on the venue surveilling for market abuse, manipulation, unusual trading patterns any other incident that may need to be escalated for resolution. We operate three shifts: the night shift in Bangalore opens the market, the early shift in Frankfurt takes over at 07.00 CET, the late shift in Frankfurt is responsible from 15.00 CET until 23.00 CET and then the whole thing repeats. Each day’s trading session begins and ends at 23.00 CET, with a two-minute window at on Monday, Tuesday, Wednesday and Thursday nights during which we must complete all funding adjustments and system maintenance. Spectrum is open for trading from 23.00 CET on Sunday until 23.00 CET the following Friday. You need to have a trading infrastructure in place that is robust and resilient and control mechanisms that are powerful and permanent. I’ll answer this by describing the challenges.
However, the question should be: if there is such pronounced demand, why are the offerings still so limited? Of course, the survey underpins our own positive experience with out-of-hours-trading which consistently accounts for more than one third of our total trading volume. Then again, this is much less commonly available than one would think.Īre you satisfied by seeing your own business model confirmed by this study’s results?
#Spectrum hours professional#
Whichever way you look at it, one thing is apparent: trading at all times of day and night, enabling investors to seize opportunities as and when they occur regardless of the relevant time-zone, is obviously a highly sought-after feature for professional and retail traders alike. While portfolio managers may seek the additional hedging opportunities, prop traders benefit from the optimisation potential of the longer trading hours. Institutional market players that responded to the survey highlighted the additional earnings potential attached to out-of-hours trading. The first thing that retail traders associate with seamless market access is convenience.
Yes, however, the motivation changes slightly when we look at different types of investors. In my view, the most striking aspect, aside from the fact that overall demand is rising, is that the majority of respondents to the survey said they are motivated by capturing specific opportunities and reacting to events at any time.Īren’t these quite obvious motivations for out-of-hours trading? Tell us about the main findings of the recently released study on extended trading hours. Reason enough to ask Michael Hall, Head of Distribution at Spectrum Markets, how this report corresponds with Spectrum’s experience, what is driving demand for out-of-hours-trading and how this demand is being met. But if 24/5 trading is such a great idea, why isn’t everyone offering it?Īccording to Acuiti, a management intelligence platform that provides operational analytics, there is strong demand from investors for trading derivatives outside their local trading hours.
As a pioneer of 24/5 trading, this is good news for Spectrum Markets. Michael, there is strong evidence that demand for out-of-hours trading is increasing. Interview with Michael Hall Spectrum Markets
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