The Securities Industry and Financial Markets Association will no longer recommend early closes on trading days before most holidays to allow more continuous access to trading liquidity.
SIFMA formerly recommended bond markets close at 2 p.m. the day before 12 holidays. The organization now recommends early closes the day before five holidays.
Under the new policy, bond markets would remain open normal hours on the trading days before Martin Luther King Jr. Day, Presidents Day, Independence Day, Labor Day, Columbus Day, Veterans Day, and Thanksgiving.
SIFMA's board and members reassessed the policy and decided closing early "may limit the liquidity window and create possible market risks."
"The interconnected, global nature of the fixed-income markets and the significant - and nearly round-the-clock - access to liquidity that many members provide would be enhanced by this change," SIFMA executive vice president Randy Snook said in a statement. "We have determined eliminating some of the early closes is a better solution. ... This step will allow firms of all sizes around the globe to have access to fixed income liquidity on an almost continuous basis on most trading days of the year."
SIFMA will continue to recommend early closes on New Year's Eve, the trading days before Good Friday, Memorial Day, and Christmas, and the day after Thanksgiving. Trading activity those days is "very limited," SIFMA said.
Markets will remain closed on the holidays themselves. The policy applies to dollar-denominated fixed-income markets.
A statement from the Regional Bond Dealers Association applauded the decision.
Michael Decker, co-chief executive officer at RBDA, said the new policy is especially welcome in a time of volatility.
Closing early before a holiday "serves no useful purpose" and "severely hampers liquidity," he said.
"We are pleased SIFMA has responded to our call to curtail early bond market closes," he said. "Investors, as well as other market participants, need fully functioning markets to in order to respond to rapidly changing developments."
