The Tokyo Stock Exchange, operated by Japan Exchange Group Inc., has made a significant decision to extend its trading hours for the first time in 70 years. This move, implemented smoothly on its inaugural day, involves elongating the trading window by 30 minutes, with the market now open from 9 a.m. to 3:30 p.m., including an hour break for lunch.

This strategic extension is aimed at enhancing the appeal of the exchange to foreign investors and fostering increased trading activity. The last modification to the trading hours occurred in November 2011 when the morning session was prolonged by 30 minutes, concluding at the current time of 11:30 a.m.

While the impact of this alteration on trading volume remains uncertain, analysts have expressed some reservations. Despite the extension, trading figures on Tuesday showed a slight dip compared to the previous Friday. This adjustment follows a similar move by the Korea Exchange in 2016, which did not yield a sustained surge in trading activity.

The Tokyo Stock Exchange’s decision to extend trading hours also serves a risk management function. In light of a system shutdown experienced in 2020, the longer hours provide a buffer against potential disruptions, allowing investors more flexibility in their trading decisions.

Compared to major global exchanges like the New York Stock Exchange and the London Stock Exchange, which operate for longer durations, the Tokyo Stock Exchange still offers a comparatively shorter trading day. The introduction of a new “closing auction” system, where buy and sell orders in the final five minutes determine closing prices, accompanies the extended hours.

Experts in the financial sector have noted that this extension could attract overseas investors, especially from Asia, contributing to market growth. The Tokyo bourse’s efforts to encourage listed companies to enhance corporate value and communicate important announcements more promptly are seen as positive steps towards bolstering market attractiveness.

In conclusion, while the impact of the extended trading hours on market activity remains to be fully realized, the Tokyo Stock Exchange’s proactive approach reflects a commitment to adapt to evolving market dynamics and enhance its position in the global financial landscape.