Financial exchanges operate on fixed hours to reduce liquidity risk and asymmetric information.
the verdict
INSUFFICIENT LEANING
refutedsupported
the weight of evidence
3 sources for · 0 against
AS REPORTEDno primary record reached; this is what the reporting says
The retrieved literature indicates that after-hours or extended trading periods experience lower liquidity, higher trading costs, and greater adverse selection or informed trading, but the sources do not explicitly establish that exchanges operate on fixed hours specifically to reduce these risks.
Liquidity Externalities and Adverse Selection: Evidence from Trading after Hours - Barclay - 2004 - The Journal of Finance - Wiley Online Library
The Journal of Finance
Volume 59, Issue 2 pp. 681-710
# Liquidity Externalities and Adverse Selection: Evidence from Trading after Hours
Michael J. Barclay,
Terrence Hendershott,
Michael J. Barclay,
Terrence Hendershott,
First published: 25 March 2004
https://doi.org/10.1111/j.1540-6261.2004.00646.x
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Barclay, M.J. and Hendershott, T. (2004), Liquidity Externalities and Adverse Selection: Evidence from Trading after Hours. The Journal of Finance, 59: 681-710. https://doi.org/10.1111/j.1540-6261.2004.00646.x
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### ABSTRACT
This paper examines liquidity externalities by analyzing trading costs after hours. There is less than 1/20 as many trades per unit time after hours as during the trading day. The reduced trading activity results in substantially higher trading costs: quoted and effective spreads are three to four times larger than during the trading day. The higher spreads reflect greater adverse selection and order persistence, but not higher dealer profits. Because liquidity provision remains competitive aft
Liquidity and Price Informativeness of Options: Evidence From Extended Trading Hours - Mu - 2025 - Journal of Futures Markets - Wiley Online Library
Journal of Futures Markets
Volume 45, Issue 11 pp. 2013-2033
RESEARCH ARTICLE
Open Access
Creative Commons license information
# Liquidity and Price Informativeness of Options: Evidence From Extended Trading Hours
Liangyi Mu,
Arie E. Gozluklu,
Liangyi Mu,
Arie E. Gozluklu,
First published: 11 August 2025
https://doi.org/10.1002/fut.70026Digital Object Identifier (DOI)
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## ABSTRACT
This paper explores the trading dynamics of the options market during extended trading hours (ETHs). During ETH, the options market is characterized by low liquidity and decreased trading activities, yet there is an increased likelihood of informed trading. The introduction of ETH improves overall market liquidity on the following trading day, as reflected by a reduction in the quoted and effective bid–ask spreads, for both index options and their underlying constituents. The improvement of liquidity is due to the timely incorporation of overnight news into option prices during ETH. Moreover, option prices during ETH are inform
Variable trading hours and market reactions to earnings announcements - ScienceDirect
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## Economics Letters
Volume 229, August 2023, 111199
# Variable trading hours and market reactions to earnings announcements☆
Philip A. Drummond, The Brattle Group
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https://doi.org/10.1016/j.econlet.2023.111199 Get rights and content
## Highlights
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Post-announcement non-trading hours facilitate information processing.
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Post-announcement non-trading hours are associated with tempered volume reactions.
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Post-announcement non-trading are associated with timely price reactions.
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Post-close earnings announcements maximize post-announcement non-trading hours.
## Introduction
Earnings announcements are subject to managerial timing around fixed stock market trading hours. Accordingly, managerial discretion compromises causal inferences from announcement times to market outcomes. In contrast to the standard paradigm, this paper examines a case in which the timing of market announcements is fixed (pre-announced) and stock market trading hours are variab
Everything we examined (3) — 2 independent sources
This check searched the claim as stated. It did not run a separate search for evidence against it.