Tokyo Stock Exchange extends closing time for 1st time in 70 years

The Tokyo Stock Exchange has extended its trading hours by 30 minutes starting Tuesday without any trouble on the first day, as it aims to make the bourse more attractive to foreign investors and boost dealing activity.

With the first extension of its closing time in 70 years, the Tokyo market will now operate from 9 a.m. to 3:30 p.m. with an hourlong lunch break, according to Japan Exchange Group Inc., the parent of the bourse's operator.

The market's trading hours were last adjusted in November 2011, when the morning session was extended by 30 minutes to end at the current 11:30 a.m.

But it remains unclear whether the latest change will immediately lead to increased trading activity on the Tokyo stock market, analysts said.

The trading volume on the top-tier Prime Market stood at around 1.9 billion shares on Tuesday, less than Friday's roughly 2.0 billion stocks, JPX data showed.

Prior to the TSE, the Korea Exchange extended its market close by 30 minutes to 3:30 p.m. in August 2016.

However, the daily average trading volume in the year ended July 2017 fell 17.5 percent from the previous year. While the volume recovered the following year, it remained below the level seen before the extension.

The longer trading hours at the Tokyo market also aim to give investors more time to trade in case of any trouble, such as a system outage, according to the bourse, which has nearly 4,000 listed companies.

The TSE suffered an all-day system shutdown in October 2020 due to a system glitch, prompting debate about extending the market's trading hours to lessen the impact of a system failure on trading opportunities.

Even after the latest change, the TSE will still offer a shorter trading day than the world's other major bourses, such as the New York Stock Exchange, which operates for six and a half hours, and the London Stock Exchange, which is open for eight and a half hours.

With the extension, the Tokyo bourse also introduced a new "closing auction" system in which buy and sell orders in the last five minutes of trading will only be accepted to determine closing prices.

The TSE hopes the time extension will also prompt listed companies to review their practice of announcing earnings and other important news after the market closes, and to release such information in a timelier manner to avoid a rush of releases at the same time.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., said the measure will likely help attract overseas investors, especially in other parts of Asia, even if the bourse still offers shorter trading hours than other markets.

Meanwhile, Makoto Sengoku, senior equity market analyst at Tokai Tokyo Intelligence Laboratory Co., said the bourse has taken some positive measures to attract more investment, such as urging companies to increase corporate value.

"To increase trading volume, it is necessary to show that Japan is an attractive market backed by the growth of domestic companies," he said, adding that some years will be needed for the bourse to achieve its goal.