What if markets close?

[Midsmartin]

" On a call with the Bank of England's new governor last week, some of the world's biggest fund managers suggested the unthinkable: shutting the stock market for two weeks"

https://theweek.com/articles/905025/cou ... ock-market

Is this a good calming idea, or should it make me panic?

[odysseus2000]

" On a call with the Bank of England's new governor last week, some of the world's biggest fund managers suggested the unthinkable: shutting the stock market for two weeks"

https://theweek.com/articles/905025/cou ... ock-market

Is this a good calming idea, or should it make me panic?

Depends on your exposure and time frames.

I have no idea if the markets will close, but we have had a good bounce so if they want to do it, now is perhaps not the worst time.

Afaik if the markets close then derivatives like options still close on their date even if one can't trade. If this is wrong, please post.

Regards,

[ursaminortaur]

" On a call with the Bank of England's new governor last week, some of the world's biggest fund managers suggested the unthinkable: shutting the stock market for two weeks"

https://theweek.com/articles/905025/cou ... ock-market

Is this a good calming idea, or should it make me panic?

Depends on your exposure and time frames.

I have no idea if the markets will close, but we have had a good bounce so if they want to do it, now is perhaps not the worst time.

Afaik if the markets close then derivatives like options still close on their date even if one can't trade. If this is wrong, please post.

Regards,

What impact would it have on pensioners or others who depend upon the stock market (drawdown pensions etc) for their income especially if implemented without much notice ?

[tikunetih]

I expect that most of those calling for a market shutdown are simply talking their own books such that they perceive that they/their firms would benefit from it.

Unless the functioning of markets becomes very materially compromised (eg. due to so many key participants or key parts of the plumbing being put out of action) I'd prefer for price discovery to continue. Hopefully that will be possible, but we' ll have to wait and see.

[odysseus2000]

ursaminortaur
What impact would it have on pensioners or others who depend upon the stock market (drawdown pensions etc) for their income especially if implemented without much notice ?

As far as I understand it, if the markets are closed there is no trading other than off market which most won't have access to.

Dividends, if already approved and not cancelled, would afaik continue.

The last big US market shut down was after 911. As I recall options that expired during the shut down went to zero, but common stock stopped trading and restarted when Bush re-opened the markets.

The UK market was closed from July 1914 till the new year but was open most of the second war and as far as I know, apart from odd disruptions due to IRA bombs, power and computer outages, it has run more or less continuously since. This precedent could be broken but the history sets a guide that the exchange won't be shut unless there are exceptional circumstances:

https://en.wikipedia.org/wiki/London_Stock_Exchange

Regards,

[Lootman]

" On a call with the Bank of England's new governor last week, some of the world's biggest fund managers suggested the unthinkable: shutting the stock market for two weeks"

https://theweek.com/articles/905025/cou ... ock-market

Is this a good calming idea, or should it make me panic?

It would be a cause for panic and a complete over-reaction. It would send the message that the markets are not working and are out of control, when in reality all that has happened is that markets have declined, as they do from time to time.

2001 and 2008 were much worse than this - about 50% declines in both cases. Whilst 1987 saw an equivalent loss (about 25%) in a single day. In each case the markets stayed open, as they always should. Even the mother of all market drops, from 1929 on, saw no need for closing markets.

And every stock market would have to be in sync, meaning for instance the NYSE, the Amex, the Nasdaq, the CME and so on. And of course you can trade many securities in many countries.

It's a truly terrible idea, especially since the markets have been liquid and been functioning, outside of a few illiquid issues. Circuit breakers that halt trading for 15 minutes, or for the rest of that day, are in place and have been invoked a few times. That is sufficient.