Integrating With The International Market: Does A-Share Need To Extend The Trading Time?

Since the implementation of this year's reform of the T + 0 stock market, there have been a lot of discussions on whether to extend the trading system of the T + 0 stock market to that of the A-share market.

During the two sessions of the NPC and CPPCC this year, some members of the NPC and CPPCC proposed to extend the trading time of a shares. Recently, Chen Xin, Professor of Shanghai Advanced Finance College of Shanghai Jiaotong University, further put forward the viewpoint of "prolonging the trading time of a shares at the right time", which once again triggered a heated discussion on relevant topics in the market.

However, according to the interview and communication of 21st century economic report reporters, there are some differences on the extension of trading duration of a shares in the market.

The paper supports the view that the trading time of A-share is the shortest in the mainstream market of the world. Considering the further integration with the international market and the improvement of pricing efficiency, the trading time should be appropriately extended. However, not all market participants believe that extending A-share trading duration is the basic trading system that must be modified at this stage, such as the T + 0 system.

The trading time of a shares is the shortest

According to the current trading rules of a shares, if the call auction period before the opening is not taken into account, the trading time of a shares is divided into two periods, i.e. the morning session is 9:30-11:30, and the afternoon session is 13:00-15:00. This rule has not changed since the establishment of the market. But compared with other mainstream markets, the trading time of A-share market is the shortest.

According to Chen Xin, the trading time of the New York Stock Exchange and the Nasdaq stock exchange is 6.5 hours, far exceeding the Shanghai and Shenzhen stock markets. London Stock Exchange trading time is as long as 8.5 hours; Frankfurt Stock Exchange in Germany and Euronext in Paris are also 8.5 hours.

It is not conducive to a longer trading time between the two markets.

Chen Xin pointed out that, in contrast, Shanghai and Shenzhen markets not only have lunch breaks as long as 1.5 hours, but also close the market just as the opening time of the three major European stock exchanges in daylight saving time, which is obviously insufficient to overlap the trading hours of the global trading system. In the Asia Pacific region, markets such as Australia and South Korea are trading all day without interruption. They try to make their trading hours match the trading hours of other major markets, and try to overlap with the daylight saving time trading hours of the three major European stock exchanges.

As Chen Xin and Chen Xin have said, the trading hours will be extended to five hours on the Tokyo Stock Exchange. Meanwhile, the Singapore Stock Exchange cancelled the midday break, trading for eight hours, which is close to the trading hours of major European exchanges.

This is also supported by the director of Wuhan Securities Institute of science and technology. He said that the trading hours of European and American stock markets are generally over seven hours, and the two-way opening of China's capital market must fully consider and fully connect with the length of trading hours in the European and American markets. Secondly, in terms of interconnection with the Hong Kong market, the three exchanges should also be integrated in terms of trading rules, including trading duration.

In addition to the connection with major international markets, the market believes that extending the trading time can improve the pricing efficiency of A-share market to a certain extent.

Before that, one of the proposals submitted by Li Dongsheng, deputy to the National People's Congress, vice chairman of the all China Federation of industry and commerce, founder and chairman of TCL, mentioned that: at present, the trading time of domestic A-share securities market is only four hours a day, which is difficult to meet the daily trading demand of hundreds of billions or even trillions. Due to the lack of timely pricing in the stock market, it may be difficult to reflect the liquidity of the stock market due to the lack of timely pricing.

Chen Xin also believes that from the perspective of synchronicity index of A-shares, the rate of return in China's A-share market can explain the volatility of individual stocks as high as 40%, which is the highest level in the major markets in the world, and there has been no substantial decline in the past decade or so. This shows that the price fluctuation of a shares contains less information related to the intrinsic value of individual stocks, and investors make trading decisions based on macro information. This shows that there is still room for improvement in the pricing efficiency of a shares. It is necessary to further improve the system design of A-share market, including trading period, and to improve the efficiency of market pricing.

How to extend the current stage

However, not all market participants believe that extending A-share trading time is a good idea. Some market views point out that the extension of trading hours may lead to investors' excessive dispersion in trading, which may lead to insufficient liquidity in the market in some periods; others point out that the extension of trading time requires relevant market entities to upgrade the trading software and hardware systems to deal with the business related to the extended trading period, which will increase the corresponding human and material resources Ben.

For the above problems, Chen Xin believes that there are also many potential costs in extending the trading time of the stock market. However, considering that China's stock market has always been active in trading and exchanges and securities companies have always attached great importance to the upgrading of trading information systems, these new costs should be within the acceptable range.

In fact, the reporter also learned when interviewing people in the industry that the market generally believes that there is no substantial obstacle to the extension of A-share trading time, and that these details can be quickly completed in a short period of time.

So, last but not least, if a shares want to extend the trading time, what kind of adjustment is the most appropriate at this stage? It is obviously unrealistic to extend the trading time of a shares to the European and American markets. Li Dongsheng proposed to increase the daily trading hours of A-share stock market to five hours.

Chen Xin suggested to extend the trading time of a shares step by step. First of all, we should postpone the closing time of the afternoon session, then shorten or cancel the lunch break. Finally, when the time is ripe, we should consider gradually advancing the opening time. In the first stage, trading was postponed to 16:00 in the afternoon. The main consideration is to increase the synchronization with the Hong Kong stock market and produce a certain trading time intersection with the European securities market. The extended time of this measure is in the mainstream working hours in China, which is low cost and easy to implement. Therefore, it is suggested to implement it first.

Dong Dengxin also believes that if we want to extend the trading time of a shares, we should first synchronize with the Hong Kong market. "At present, the Hong Kong market is obviously more advanced, developed and mature. The trading time of our A-shares is too short. Therefore, I advocate that the consistency of trading time between Hong Kong and the mainland should be promoted first. We can take the lead in extending the trading time of a shares to the same length of time as the HKEx. "