Tokyo exchange said to be considering longer trading hours

TOKYO • The Tokyo Stock Exchange (TSE) is mulling over extending trading hours for cash equities in a move designed to attract retail investors and foreign traders, the Nikkei newspaper reported on Monday, without citing anyone.

The bourse, which currently ends trading at 3pm Tokyo time, is considering expanding hours into the afternoon or evening in a change that could be in time for a system renewal in 2024, the report said.

An advisory body plans to meet as early as this week and solicit opinions from brokerages and institutional investors, according to Nikkei.

If realised, the move would be the first major change in trading hours in Tokyo in more than a decade.

In 2011, the exchange shortened its lunch break by 30 minutes to the current one hour.

The Tokyo exchange now trades between 9am and 3pm local time, with the break between 11.30am and 12.30pm, making its five-hour trading day considerably shorter than many other regional rivals.

The bourse is also considering cancelling the fixed lunch break, the Nikkei said.

A spokesman for Japan Exchange Group, which operates the TSE, said it was not the source of the report.

"It'll be important to have a debate in the securities industry," Finance Minister Taro Aso said of the report.

Longer hours would not lead to much burden on those offering online services, but "for the many places offering face-to-face services, it will impact staffing and opening hours", he added.

A similar recommendation in 2014 for the exchange to consider an evening session failed to result in changes.

But with a growth in online brokerages since that attempt, a proposal could lead to a clash between brokerages offering in-person services and the increasing number of online outlets.

One of the goals, according to the report, is to provide opportunities for Japan's rising number of retail investors, whose ability to trade during work hours is limited.

"Online brokerages will be in favour, and they're much bigger than they used to be," said Mito Securities chief fund manager Hajime Sakai. "That's the way the times are trending."

With most companies reporting earnings after the close of market, trading on earnings is often done on exchanges overseas, or on proprietary trading systems run by securities firms, such as the SBI Holdings-backed Japannext.

"Longer trading hours does not increase the amount of money that people have to trade," said analyst Travis Lundy.

"One of the important functions of a market is its daily settlement mechanism - a closing price. A lot of volume gets traded around that price and a closing auction function is normal. Putting that much later would be seriously inconvenient and serves nobody."

BLOOMBERG