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Lunch Break Cut on Tokyo Exchange, Following Hong Kong

Traders at the Tokyo Stock Exchange
Traders work on the floor of the Tokyo Stock Exchange (TSE) in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

Nov. 25 (Bloomberg) -- The Tokyo Stock Exchange plans to shorten its lunch break to one hour, joining Hong Kong in extending the trading day as Asian bourses intensify competition for revenue.

Starting next year, the break will run from 11:30 a.m. to 12:30 p.m. local time for spot trading, down from 90 minutes now, Atsushi Saito, president of the bourse, told reporters in Tokyo yesterday. That will lengthen the trading day to five hours, still less than Sydney, Singapore and Seoul.

Hong Kong said this week it’s expanding trading hours to align more with China, which briefly overtook Japan this year as the world’s second-largest stock market, behind the U.S. The average number of shares traded daily in Hong Kong has surged 477 percent from 2005 through October this year, exchange data show. In Tokyo volumes have fallen 6.6 percent in the same period, according to data compiled by Bloomberg.

“Considering trading hours in Asia, and the practicality of this, we decided to shorten the break to increase trading opportunities,” Saito said. “We calculate that this will increase trading by around 6 percent.”

The bourse began surveying investors and brokers in July, and received 128 responses, according to a statement from the exchange. Seventy percent of respondents were against total abolition of the break, the statement said.

‘Bigger Pizza?’

“I doubt that volume will increase much as a result of this,” said Mattia Ciancaleoni, director of equity sales at Citigroup Global Markets Japan Inc., a unit of Citigroup Inc. “In some ways it’s like believing you have a bigger pizza just because you have cut more slices.”

In order to increase trading activity, the bourse considered extending trading hours by changing the opening and closing sessions for the whole day, or establishing a night-trading session, according to a statement. This was deemed “currently difficult,” the exchange said.

“Instead of longer opening hours, they need to raise the attractiveness of the market first,” said Yoji Takeda, head of the Asian equity-management team at RBC Investment (Asia) Ltd., which oversees $1.1 billion in Hong Kong. He didn’t do the Tokyo survey. “It probably won’t have much of an effect on the market.”

Tokyo’s market is currently open from 9 a.m. to 11 a.m. and 12:30 p.m. to 3 p.m. Saito said today he expects the longer hours will take effect in the first half of next year, once brokerages are ready.

‘Improve Corporate Governance’

“This will have a relatively modest impact,” said Citigroup’s Ciancaleoni. “What will lead to higher volume on the Tokyo Stock Exchange is not so much reducing the lunch break, but other issues such as better corporate governance or a recovery in the earnings and momentum of Japanese companies.”

London, Paris and Frankfurt are open for more than 8 hours daily, while New York trades for 6 1/2. Singapore is proposing to move to 8 hours from 6 1/2 by abolishing its lunch break.

Hong Kong Exchanges & Clearing Ltd. will cut its traditional two-hour lunch break, the longest among developed markets, to 90 minutes from March 7, and to one hour in March 2012. The stock market will open at 9:30 a.m., instead of 10 a.m., with a break at 12:30 p.m., and the close at 4 p.m.

“Getting rid of lunch breaks is not very practical,” Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management Co., which has $123 billion in assets globally. “People do need to go for lunch breaks -- not just the traders, but fund managers like myself.”

‘Not Very Practical’

Even with the break shorter, Japan and Hong Kong will be among a minority of developed-market exchanges that stop for food. The main bourses in the U.S., U.K., Australia and Germany -- where the trading day is 11 hours -- operate without a break.

“The TSE is losing ground in the global market,” said Takeshi Osawa, a senior fund manager in Tokyo at Norinchukin Zenkyoren Asset Management Co., which oversees about $22 billion. “But that’s not something the TSE can change on its own. Unless the government and companies help make Japanese stocks more attractive, tweaking the exchange’s system won’t make much of a difference.”

To contact the reporters on this story: Anna Kitanaka in Tokyo at; Kana Nishizawa in Tokyo at

To contact the editor responsible for this story: Nick Gentle at

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