Trading Hours on the Stock Exchange: From Ring Trading to Extended Trading Hours

When the Swiss stock exchange still relied on ring trading, market activity was highly ritualistic: Traders, almost exclusively male, stood in the ring, calling out prices and negotiated trades aloud. In the case of many less liquid securities, price setting often occurred only once per day, while equities that were traded more actively had their prices set several times per day. This mechanism was the result of the technological and organizational limits of the times: Floor trading was physical, slow, and the order volume was concentrated on a few stocks. As a result, price determination was episodic, and not continuous – as it is in today’s electronic trading.

The advent of electronics brought profound changes. When order books became fully electronic and matching systems were automated in 1996, the market accelerated. Trading shifted from periodic ring call outs to continuous matching, bookended by auctions at opening and closing. The notion of a trading day was transformed: On the Swiss stock exchange, the day officially begins at 6 am (Pre-Opening), clearing runs from 8 am to 6:15 pm, and trading doesn't close until 10 pm. But actual trading in Switzerland runs from roughly 9 am until 5:40 pm.

The classic expression “working 9 to 5” is less a reflection of the stock exchange than it is of industry: It’s the typical working model of the factory or the office. Nevertheless, it also fits the history of stock exchanges: As they became increasingly regulated and formalized, trading windows from roughly 9 am until the afternoon became established for many asset classes. These hours corresponded to traditional daily business and constituted a solid basis for many market participants.

Today, a trading day opens electronically at 9 am, but not exactly, as the start is subject to what’s known as Random Time plus or minus up to two minutes. This randomly generated offset serves to impede price manipulation at opening.

Continuous trading runs the entire day until the closing auction begins at 5:30 pm, followed by a Trading-at-Last (TAL) window in which transactions can be executed at the official closing price: In the case of blue chips and mid/small caps, trading continues until roughly 5:40 pm.

Traditionally, the bond market was always the domain of institutional investors such as pension funds, insurance companies, and banks. This market has always started very early in the day since major players wanted to process interest rates, new issues, or monetary policy news. Today, trading in Swiss government bonds and mortgage bonds starts at 8:30 am, before many stock markets begin.

Trading of bonds denominated in Swiss francs begins at 9:30 am, a reflection of historical segmentation. Not all bond types were as highly standardized from the beginning. Trading in these “fixed-income securities” usually ends at 5 pm. That defines a clear operational end for the bond market that is in line with the clearing and settlement process.

In the past, investment funds were largely issued via banks and could be subscribed to once per day. Today, trading in funds and especially ETFs begins at 9 am, analogous to equity trading.

The closing auction for these products falls between 5:20 pm and 5:35 pm, depending on segment.

Structured products, certificates, leverage products, capital protection, are comparatively new terms to describe the desire to create tailored risk/return profiles, often with complex models relating to underlyings. That is why their regular market, the Price Validation Market (PVM) as it’s known, doesn’t open until 9:15 am, and doesn’t close until at 5:15 pm.