Health professionals stand at the entrance to the floor of the New York Stock Exchange to check the temperature of everyone entering on March 16, 2020 at Wall Street in New York City.
Johannes Eisele | AFP | Getty Images
The country may be prepared to shut its schools, concerts, sporting events, shops, and even bars and restaurants, but one industry that is deeply resistant to shutting down is Wall Street.
“It is important for the markets to remain open, and for them to function in a fair and orderly manner, as they have been,” Stacey Cunningham, New York Stock Exchange president, tweeted out this afternoon.
She’s not alone. The directive to keep open the markets goes as high as Treasury Secretary Steve Mnuchin. “We intend to keep the markets open,” he said Friday on CNBC. “That’s a sign of confidence to people. There are people who want to come in and buy. We want to have markets open.”
Terry Duffy, CEO of the CME, also chimed in, telling CNBC’s Kelly Evans today, “You should at least leave the markets open, so people can transact.”
Why the opposition to closing the markets for a “trading holiday?” Cunningham perhaps said it best: “Closing the markets would not change the underlying causes of the market decline, would remove transparency into investor sentiment, and reduce investors’ access to their money. This would only further compound the current market anxiety.”
Beyond the ideological opposition to closing, there is the practical issue: The U.S. is part of a global market system. It could not effectively “shut down.” Other markets would find ways to trade U.S. stocks through foreign exchange traded funds or other proxies.
Beyond those points, the calls to halt trading are a bit puzzling, given that trading has indeed been halted on an intraday basis. Circuit breakers have been activated three times in the last six trading sessions. These circuit breakers were designed to pause the market, but not necessarily halt the market declines, and by all accounts they seem to have worked well.
Indeed, the overall market has been functioning reasonably well, and that is the crux of the argument to keep markets open. Markets are not here to save investors from losses, but they are designed to operate reasonably efficiently, and as long as that is happening, there is no reason to intervene.
Tal Cohen, head of North American Market Services at Nasdaq, made this point on CNBC this afternoon: “We understand the sentiment in that it’s unprecedented in terms of the events that we’re seeing and the volatility we’re seeing and the heightened levels of activity — but markets are functioning well. And so the question we would have is, what is the rationale for that? Will that improve investor confidence or not?”
Cohen implied it would certainly not improve confidence. That’s a “solution” we could likely do without.