11/27/2020 — Half-Brained Half-Day
A couple of times a year the Chicago Board Options Exchange (CBOE) and Chicago Mercantile Exchange (CME) shorten trading hours either before or after a major financial holiday. Ostensibly exchanges engage in this practice to prevent market closure for a period of four straight days — or so I was told. I believe that this holiday tradition, like all exchange traditions, exists solely to make more money. A cynical observation perhaps, but spot-on no less.
In most years, these special days amount to a few wasted hours shared by thousands of traders who are forced to pay at least a modicum of attention to their screens. There are the outlier days like the 2014 Thanksgiving energy massacre and the precipitous drop of Christmas Eve 2018 when President Trump couldn’t keep his mouth shut, but these are few and far between. Memorable anomalies like these would simply have taken place on the next trading day, or perhaps not at all, as participants took their time to mull over the news as opposed to frantically trading in a shortened session. In reality, these half-brained half-days cause just as much volatility as they supposedly prevent.
Close the markets for a day. Let people enjoy a little respite from the 24-hour trading cycle…or don’t bother with the pretense and continue with business as usual. Shortened trading hours are stupid.
