It’s the Grinch That Stole New Year’s.
Thanks to whoever created an obscure piece of New York Stock Exchange (NYSE) red tape — officially known as Rule 7.2 — US equity markets won’t commemorate the start of 2022 with a holiday.
The rule stipulates that when a holiday falls on a Saturday, the market will close on the preceding Friday — unless, that is, “unusual business conditions exist, such as the ending of a monthly or yearly accounting period.” Since Dec. 31 marks the end of the month, quarter and year, that means a full session on New Year’s Eve and no day off on the following Monday.
While the exchange published its holiday schedule a long time ago, complete with a footnote under the New Year’s Day 2022 column, some market participants are only now realizing they’re getting stiffed on the holiday. Adding salt to the wounds, bond traders get to start their New Year’s Eve parties a little earlier: Sifma is calling for a 2 p.m. market close that day.
“People are going to lose their minds, honestly,” Kim Forrest, founder and chief investment officer at Bokeh Capital Partners, said by phone. “I’m looking at that Monday and saying, what the what? Are you kidding me?”
There could be more at stake than just sour grapes. Scott Bauer, chief executive officer of Prosper Trading Academy, has a family ski vacation planned for the end of the year and said he will adjust his holdings ahead of time just in case.
“What I will certainly do is position myself accordingly so that going into that long weekend, any positions that don’t expire Dec. 31st, anything that I may have subsequent to that, I’ll make sure I don’t have any expiring options or futures positions that first week of January,” he said. “I’ll be attuned to the market, but I absolutely will not be putting on new positions.”
It’s not the first time Wall Street has been deprived of a day off for the holiday. Rule 7.2 also reared its ugly head 11 years ago when New Year’s Day fell on a Saturday in 2011. And there’s actually good news on the holiday calendar this year: A new day off for Juneteenth National Independence Day has been added on Monday, June 20.
Not to mention, many traders these days can get away with avoiding the office since the pandemic forced them to establish robust work-from-home setups. Volumes remained elevated in the days ahead of Thanksgiving last year as more traders, stuck at home due to the pandemic, remained logged on for clients.
Paul Nolte, portfolio manager at Kingsview Investment Management, plans to fly from Chicago to Florida at year-end and bring his “office,” meaning his laptop, along. “I still plan on partying,” he said. “I’ll just have to start a little later.”
Still, it goes without saying that not everyone is thrilled about a missed day off, especially since it’s a federal holiday. An NYSE representative declined to comment.
“A bunch of Grinches,” Steve Chiavarone, portfolio manager and head of multi-asset solutions at Federated Hermes, said while looking at the calendar. Holiday or not, he added, many fund managers try not to be too active at the end of the year.
“You generally see liquidity tail off that last week of the year, really from Christmas on,” he said.
It’s not just market liquidity that will be reduced this year.
“Maybe I wait a little bit later in the day to start sipping champagne,” Chiavarone said. “I don’t really need to be drinking before 4 p.m.” — Bloomberg