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Highlights:
- Proposal for Later Releases: Regulators are evaluating shifting economic data releases from 7am to market hours to reduce pre-market volatility.
- Industry Concerns: Institutional investors argue early releases create unnecessary market disruptions and increased costs for the real economy.
- Decision Pending: A final decision is expected in early 2025 following consultations between the Bank of England and the Office for National Statistics (ONS).
UK financial regulators are contemplating a significant shift in the timing of critical economic data releases, following calls from institutional investors to move these announcements to market hours. The proposal aims to mitigate pre-market volatility and enhance market liquidity.
The Current System Under Scrutiny
Currently, the Office for National Statistics (ONS) releases key economic indicators such as inflation, unemployment, and GDP figures at 7am—an hour before stock and bond markets open at 8am. Sterling interest-rate markets begin trading slightly earlier, at 7.30am. This practice has drawn criticism for sparking volatility and creating inefficiencies that ripple through the broader economy.
Prior to the pandemic, these data points were released at 9.30am, a schedule that aligned more closely with active trading hours.
Industry Concerns and Rationale
A Bank of England (BoE) committee, which includes representatives from leading financial institutions such as Blackrock, HSBC, NatWest, and Rabobank, has expressed a preference for later release times. The panel argues that pre-market releases can widen spreads due to lower liquidity, increasing transaction costs and indirectly impacting the real economy.
According to minutes from the BoE’s SONIA stakeholder advisory group, “Data releases outside of market hours can cause spreads to widen due to reduced liquidity. This can be transmitted to the wider economy via increased costs.” The group also noted that pre-announcement periods often see reduced liquidity, further compounding market inefficiencies.
Global Context and Market Practices
Shifting to market-hour releases would bring the UK more in line with international norms. For instance, the US releases key economic indicators, such as employment and inflation data, at 8.30am Eastern Time, during market hours. The BoE already schedules its Monetary Policy Committee (MPC) announcements during active trading periods, demonstrating the potential benefits of such an approach.
Consultation and Decision Timeline
The Bank of England is currently consulting with the ONS on the feasibility of later releases. While the discussions are ongoing, a final decision is expected in early 2025. The aim is to create a more stable trading environment that supports real-time risk management and minimizes unnecessary economic costs.
Potential Implications for Stakeholders
A shift to market-hour data releases could have broad implications for various stakeholders:
- Institutional Investors: Improved liquidity during data releases would facilitate more efficient price discovery and risk management.
- Corporate Reporting: Companies, which often release earnings and updates via the regulatory news service (RNS) from 7am, might need to adjust their schedules to align with any changes in economic data timing.
- Policy Makers: Aligning data releases with market hours could provide a more transparent and efficient framework for interpreting economic conditions in real-time.
As the consultation progresses, the proposed change represents a significant step towards fostering a more stable and transparent financial ecosystem in the UK.
