In a significant move aimed at enhancing its appeal to foreign investors and increasing trading activity, the Tokyo Stock Exchange (TSE) has extended its trading hours for the first time in 70 years. The trading hours have been extended by 30 minutes, with the market now operating from 9 a.m. to 3:30 p.m. This adjustment, implemented by the Japan Exchange Group Inc., marks a historic change for the TSE, which previously saw its last trading hour extension back in November 2011 when the morning session was prolonged by half an hour.

The decision to extend trading hours comes as part of the TSE’s efforts to attract more foreign investors and revitalize trading on the exchange. By providing an additional 30 minutes of trading time, the TSE aims to create a more conducive environment for market participants. Despite this bold move, analysts remain cautious about the immediate impact on trading activity. On the first day of the extended hours, trading volume on the Prime Market fell slightly compared to the previous trading day, indicating a measured response from market participants.

The TSE’s move follows a similar extension by the Korea Exchange in 2016, which did not yield a significant increase in trading volume in the subsequent years. However, the TSE’s decision also takes into account the need for contingency measures in case of unforeseen events such as system failures. By extending trading hours, the TSE hopes to provide investors with more flexibility and time to react to unexpected situations, thereby safeguarding the market’s stability.

One notable feature introduced alongside the extended trading hours is the new “closing auction” system. This system allows buy and sell orders in the final five minutes of trading to determine closing prices. Additionally, the TSE expects the extended hours to prompt listed companies to rethink their practices of releasing important information after market hours, encouraging timelier disclosures to prevent information overload at the end of the trading day.

Market experts have expressed mixed views on the impact of the extended trading hours. While some believe it will attract overseas investors, especially from other Asian markets, others stress the importance of showcasing Japan as an attractive investment destination supported by the growth of domestic companies. It is anticipated that the TSE’s efforts to increase trading volume and enhance market attractiveness will require time to yield tangible results.

In conclusion, the Tokyo Stock Exchange’s decision to extend trading hours after seven decades marks a significant milestone in the evolution of Japan’s financial market landscape. This strategic move reflects the exchange’s commitment to adapt to changing market dynamics and enhance its competitiveness on the global stage.