A large industry is setup, with how many [thousands] of people employed and expected to execute on their jobs related to this market, and they just lost a whole day of doing their job.
So you have the opportunity costs for those people being paid to do nothing for a day and generating nothing in the form of revenue. Rightly or wrongly, a significant amount of profit generated in the stock market is from short term moves / games, not from buying and holding for long periods.
Second, and I don't know if this is the case, but what about companies that were issuing equities to raise cash on that day? They had geared up entire investment banking teams, with customers orders lined up, and had a whole game plan for executing the offerings.
That all went up in smoke and they will have to re-prepare everything for another day. That's true to IPOs, general follow-on offerings, to some extent ATM programs, etc.
Oh, my biggest worry was futures expiring, but I hope nobody thought to switch over to a new system on the same day, and same with an IPO/2ndary offering.
> How much was lost by being unable to sell something today that you weren’t willing to sell yesterday?
Could be a lot. Markets are not disconnected. If only Japan existed, sure. Some orders would no longer exist, but nothing major, because noone else would be trading anyway.
But suppose this was during an economic downturn. You are trying to SELL SELL SELL because all countries worldwide are feeling some economic pressure and you can't because the exchange is down.
The next day, whatever assets you had are now worth a fraction of what they were one day before.
Oh, and there are some financial instruments that expire.
> You are trying to SELL SELL SELL because all countries worldwide are feeling some economic pressure and you can't because the exchange is down.
Some exchanges deliberately close in those circumstances. Or when big news is about to be released.
But as much as people were unable to sell, there are nearly as many situations where being unable to sell is a good thing.
I guess we’re eventually going to argue for 24/7 stock exchanges and for some reason very few are.
My own experience in Canada is that a lot of big Canadian stocks also trade in NY, and when one market is closed and the other isn’t because of different holidays, not a lot happens.
I guess an unexpected crash is different, but my guess is that everyone takes the day off, avoids releasing any big news out of respect for the situation and gets back to it tomorrow.
No need to pull 24/7 uptime into the conversation, I would say. The impact is that the exchange was not open when they were expected to be open. An outage like that is more disruptive than scheduled "downtime" because of being unplanned.
Except for FX, there is no need for 24/7 and plenty of drawbacks; both in terms of overhaed and execution quality.
In fact the trend is in the opposite direction, towards shorter trading hours as well as more turnover in the opening and closing auctions.
Shorter hours especially would be a huge win for work-life balance and diversity in the industry, and just as importly for reducing costs.
Having the markets open longer only spreads liquidity thinner across the day, and moreover having announcements made, corporate actions processed, etc etc is better done when the market is closed so everyone can be on the same page when the happen.
Stock exchanges earn major share of their profit from processing the orders.
They just lost at least a whole day of revenue.
After compiling some number for their annual report[1], I would say the loss from TSE revenue alone is roughly 2 million USD. But considering the effect trickling down the revenue stream where other security partners whose revenue depends on earning transaction fees, I would say the real damage would be many folds of that 2 million loss from TSE.
More or less by definition, this won't impact their yearly bottom line by more than 0.3% (at least to within first order). Which is quite a bit, but it still seems super minor. Just like 2 million. Isn't that peanuts for a stock exchange?
Agreed that 2 million USD is not much compared to total revenue.
However, you see, TSE YoY growth from 2017 to 2018 is roughly 4 million USD. Growth is hard as it is for TSE, leaving money on the table like this time definitely hurts.
The exchange lost a lot of revenue. Trader's and investor's time was wasted, you can't just change the open time without screwing up a lot of systems. Risk management would've been an issue too, a lot of people crossing the spread to derisk and transferring wealth to market makers.
Opening late won't break much. Most systems will be like "well shucks there's no trades to process, better just sit here and wait". Opening early will break everything.
I was talking about monetary damages - excluding any kind of loss of life or personal injury.
I could have picked a better metaphor!