The notion of a four-day work week is gaining traction, as a pilot program in the U.K. proved unexpectedly successful last week.
Could this new scheme ever reach the meat grinder corridors of Wall Street?
“We have observed some interest in compressing the workday in the stock market, but nothing concrete as of yet,” said Alex Soojung-Kim Pang, global programs director for 4 Day Week Global, the nonprofit that carried out a groundbreaking study that is changing the perspective companies have on how long the work week should last.
A Letter From The UK: Working Less Pays More
Results from the largest-ever pilot program on reduced work schedules were released in the U.K. last Tuesday.
In the pilot, 2,900 employees from 61 British companies reduced their work schedules to four days a week without reductions in pay. After six months of the experiment, a whopping 92% of the companies decided to continue with the scheme, while 18 of them made it a permanent policy.
The positive results went beyond the expected impact on worker well-being, which included a vast majority of employees reporting reduced levels of burnout, anxiety, fatigue and sleep issues, as well as finding it easier to balance work with household responsibilities, social life and self care.
Companies reported no drops in revenue, which actually rose 1.4% on average, and a drop of 57% in workers leaving their companies.
Why It’s Hard For Wall Street To Switch To A 4-Day Week
“To put it bluntly, a four-day trading week will never happen,” says Giles Coghlan, chief market analyst for HYCM. “As the old saying goes, money never sleeps, and speculative market activity is as much a compulsion or hobby as it is a job.”
While companies in the trial had agency over how to schedule their working hours, companies involved in stock trading revolve around established market hours.
For a stock trader, analyst, investor, fund manager or anybody working in the financial sector, to be able to switch to a four-day work week, a coordinated effort would need to be made between the main stock exchanges in a decision that would impact the lives of thousands of workers.
According to the U.S. Bureau of Labor Statistics, 9.1 million workers were part of the Financial Activities supersector in January 2021.
Both the Securities and Exchanges Commission and Nasdaq Inc NDAQ declined to comment when asked whether a discussion about shifting to a four-day work schedule had occurred internally.
Asher Rogovy, chief investment officer at Magnifina, said it’s unlikely for the stock exchanges to move to a four-day week. Reducing the number of trading days, he says, would constrain liquidity and lead to increased volatility.
“This is not an outcome that most financial professionals would want to experiment with,” Rogovy said.
For Coghlan, results from the U.K.’s trial are further incentive for the equity markets to remain open five days a week.
“If more firms move to a four-day week, retail investors will probably want to use their extra day off to trade. As a result, the Intercontinental Exchange Inc ICE-owned NYSE, NASDAQ and SEC would need to stay open to accommodate for this retail activity,” he said.
Could The Equity Market Change Its Schedule (Again)?
The U.S. equity markets function from Monday through Friday from 9:30 a.m. to 4 p.m., eastern time.
Even though eliminating one day of trading might be far-fetched, Soojung-Kim Pang said that reducing the trading hours could be the right move for Wall Street.
“The first hour of trading in the European market often attracts little liquidity and subsequently is a more costly time to trade,” he says. The final hour of trading, on the other hand, attracts around 35% of total daily volume.
“So, a shortened day is a win-win for both traders and trading companies,” says Soojung-Kim Pang as it would centralize liquidity, facilitating more stable trading conditions.
“Eliminating the first hour would allow traders more time to study charts and do other stuff, and cutting the last half hour would encourage more trading earlier in the day,” he says.
Changes in trading schedules are not unheard of in the stock market. In 1985, the NYSE shifted its market opening time from 10 a.m. to 9:30 a.m. Previously in 1974, the exchange extended its closing time from 3.30 p.m. to 4 p.m.
These trading schedules are by no means universal. Exchanges in Asia, for instance, stop trading for one or one-and-a-half hours between the morning and the afternoon, including the Tokyo Stock Exchange, the Hong Kong Stocks Exchange and the Chinese exchanges of Shanghai and Shenzhen.
At the time of its 1985 change, the NYSE stated the extension in working hours was meant to “set the stage for eventual 24-hour global trading of equities.” Almost 40 years later, that still hasn’t come true.
While that would mean going in the complete opposite direction, the possibility remains on the table, especially with the rise of crypto trading.
Contrary to stocks, the market for crypto assets remains open 24/7. Yet, paradoxically, says Magnifina’s Rogovy, “extending the trading hours to 24/7 might have the same increased volatility effect as reducing its hours.”
“For any exchange, it’s best to have the most professional traders to be present at the same time,” said Rogovy.