Stocks Trade for 390 Minutes a Day. Increasingly, Only 10 Matter

The regular market for US equities runs for 390 minutes on a standard trading day. But at the rate things are going, eventually the last 10 might be the only ones that matter.

About a third of all S&P 500 stock trades are now executed in the final 10 minutes of the session, according to data compiled by BestEx Research, a developer of trading algorithms. That’s up from 27% in 2021.

Now fresh evidence emerging from Europe — where the pattern is similar — suggests the trend may be hurting liquidity and distorting prices.

It’s new ammo for critics of the global boom in passive investing, because index funds drive the phenomenon. These products typically buy and sell shares at the close, since the last prices of the day are used to set the benchmarks they aim to replicate.

just wait for it

Assets in passive equity funds have surged over the past decade to more than $11.5 trillion in the US alone, according to data compiled by Bloomberg Intelligence, shifting ever-more trading to the end of the session. Active players seeking to take advantage of that liquidity have followed, creating a self-reinforcing cycle.

The closing auction in Europe, which occurs after the end of regular trading, now accounts for 28% of volumes on public venues, up from 23% four years ago, data from Bloomberg Intelligence and analytics firm big xyt show.