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Why the US stock market must open on Wednesday

Many financial indicators are determined based on final settlement prices, which are determined at the end of each month.

Us stock closing sandy 2012 10 29Enlarge
NEW YORK, NY - OCTOBER 29: The closed New York Stock Exchange, barricaded with sand bags is seen during the arrival of Hurricane Sandy on October 29, 2012 in New York City. The core of Sandy's force is supposed to hit the New York area Monday night. (Andrew Burton/AFP/Getty Images)

It's that time of the month for traders — the end of the month. The thing is the US stock market is closed today and tomorrow as Hurricane Sandy intensifies along the eastern seaboard.

The last time the NYSE closed down because of weather was for Hurricane Gloria on Sept. 27, 1985.

One of the huge questions being asked by traders and investors is "When will the markets be open?"

In fact, some are concerned about whether the markets will re-open before Wednesday, Oct. 31st.

That's because the last trading day of the month is a very important time for people across the financial services industry.

The reason, a New York-based trader explained, is end of month is when settlement occurs to determine market performance, fund performance, trader performance, which are all based on the final settlement prices.

So for example, if a hedge fund needs to send out statements to their investors outlining their performance, if they hold a number of positions, they will need the exchange to be open. It is more preferable for them to have the most recent settlement prices as possible to best reflect their performance to investors.

What's also critical is the desire for mutual funds and hedge funds to square away end of month positions based on asset allocation models that they have. While this is more prominent at the end of the quarter, this still does play a factor at the end of the month as well.

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Original Source URL: 
http://www.businessinsider.com/why-its-important-the-stock-market-opens-2012-10

http://www.globalpost.com/dispatch/news/regions/americas/united-states/121029/us-stock-open-sandy