Wall Street Goes Slightly Crazy Each Weekday Afternoon. Here's Why
- Price distortions driven by use of passive investing vehicles
- End-of-day auction made up 7% of total daily volume in 2018
Photographer: Drew Angerer/Getty Images
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Just after 4 p.m. each day, Wall Street goes slightly crazy. Equity exchanges snap to life for a few seconds as banks, brokers and market makers submit to a process called the closing auction, in which humans and computers pair off $15 billion worth of stock to set a final price for thousands of companies.
It’s a miracle of computer science, one of the securities industry’s big shows of technological force. But it’s not quite the seminal event of equity pricing that many investors assume it to be.