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Bloomberg

Global Stock Exchanges Get Live Lesson in Perils of a Shutdown

March 19, 2020

As stock exchanges around the world decide how to operate at a time of unprecedented market turmoil, the Philippines just offered a real-time lesson.

After two days without trading, equities tumbled 13% as the market reopened Thursday, with investors rushing to liquidate holdings once they could. It’s the reason many other exchanges around the world say they’ll stay open, even as they consider new restrictions like reduced hours or bans on short selling.

“Closing the markets generates even more panic,” Ignacio Cantos, investment director at ATL Capital in Madrid, said by phone. “Nowadays the systems are ready to support investors and traders working from home and it’s better if they remain open as the stock market has praised itself for being the asset that always offers prices. Of course, we are seeing big drops, but that may also generate historical opportunities.”

”During volatile periods, some traders will favor the exchanges, as they are often viewed as more stable, with better technology, and generally deeper liquidity,” said Anish Puaar, market structure analyst for Europe at Rosenblatt Securities. “Some may also be reluctant to rest orders in dark pools or periodic auctions if prices are swinging around because they want certainty of execution.”

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