US Share Dealing at Weird Hours

[FatMartinR]

Today is Monday 7th May.   It's coming up to midday & it's a UK Bank Holiday.    I understand why no UK shares are trading because obviously the FTSE is closed today.     

 

But why I am seeing US shares (Microsoft, Facebook, Amazon, Spotify) trading?    Their exchanges don't even open until 2.30pm UK time, yet they've been trading all morning.    How is this possible?

[JamesIG]

https://www.ig.com/uk/shares/out-of-hours-shares?icmp=extended

 

You may find the above link useful. 

 

 

The US stock market opens from 2:30pm to 9pm London time, which means many UK-based trading companies only allow you to trade up until 9pm.

 

We know that many IG clients need to trade outside these hours to make the most of company announcements. That's why we've made sure our clients can trade CFDs and spread bet on dozens of key US stocks at the most important times - up until 1am Mon-Thurs and 10pm Fri (London time).

 

This offering is also available to share dealing clients, from 12pm-10.30pm Mon-Thurs and until 10pm Fri.

[FatMartinR]

I can't say I'm any the wiser.     If the market closes at 9pm (UK time), how can you trade on it if it's not open?

What am I not understanding?

[JamesIG]

In the US the 'main session' will take place from 9.30am until 4pm local time (which translates to 2.30pm to 9pm UK time) however these particular markets also have something known as 'pre market' and 'post market'. This is from 4am to 9.30am, and from 4pm to 8pm local time respectively. Most brokers only give you the chance to trade in the main session, however we give access to the pre and post market. 

 

Put simply, although the main session is closed, you can still trade American equities outside of these times. Most brokers don't allow you to and therefore people think you can't, however with IG, you can.  

 

I hope this clarifies things?

[FatMartinR]

Oh, Ok.    But why do they do it that way?     They could just extend their opening hours to the max.

[JamesIG]

To be honest I'm not sure. It's actually interesting to see the advent of crypto exchanges create the first truly 24/7 never closed exchanges where you can trade on Christmas day, Sundays, and every hour in between. Maybe this is the way exchanges are going....

 

I guess it's more a legacy thing where the main session is the time for the most liquidity, but then the advent of computers allowed for computer based matching engines and remote access for all individuals (not just massive institutions which had the funds), however the underlying legacy systems and dogmatic principles just haven't caught up. 

 

Put another way, it would be quite a bit step to have the LSE (or NYSE or others) open 24/7 as the infrastructure or desire just isn't there. I doubt they'd find many who would be happy to work the night shift, and possibly wouldn't see sufficient business to justify costs.