Traders get so distracted by big World Cup games that market volumes fall by 40%

Reuters/Brendan McDermid

Traders and workers react while watching the U.S. 2014 World Cup soccer match against Germany on the floor of the New York Stock Exchange June 26, 2014.

• World Cup games are highly distracting for financial market participants, research from Citi has found.
• "We find that football is indeed distracting, subtly impacting market depth, traded volumes and execution cost," Citi analysts David Bieber and Kim Jensen wrote to clients on Tuesday.
• Using data from this World Cup, and the previous tournament - held in Brazil in 2014 - Citi found that during games traded volumes can fall by as much as 50%, while the cost of executing trades increases sharply.

The planet is gripped by World Cup fever right now. A wildly exciting tournament has seen frequent shocks, tight finishes, and two penalty shoot-outs already, and it seems that even the financial markets aren't immune to the thrills and spills happening in Russia.

A new study from analysts at Citi has found that the World Cup is highly "distracting" to those working in the fixed income markets.

"We find that football is indeed distracting, subtly impacting market depth, traded volumes and execution cost, however, distraction manifest itself in different way for different products," Citi analysts David Bieber and Kim Jensen wrote to clients on Tuesday.

Using data from this World Cup, and the previous tournament - held in Brazil in 2014 - Citi found that during games traded volumes can fall by as much as 50%, while the cost of executing trades increases sharply.

"We identify large falls in traded volumes during matches by up-to 50%, while market depth / liquidity is more robust with execution costs only increasing between 5-20%," the pair wrote.

Perhaps unsurprisingly, Europe is impacted more severely than the Americas, according to Citi's findings.

"The football distraction dynamics are larger in Europe than in the US," the bank wrote.

"Given the larger following of football in Europe, this is no surprise. In the US, the football distraction increases costs by only 4% while in European markets it is more than 10%."

The bank's findings echo those of Thomson Reuters, which before the 2018 World Cup showed that during big games in the 2014 World Cup trading volumes on major international stock-market exchanges plummeted by more than comparable periods in the prior years. Traders were especially distracted whenever Brazil, the host nation, and Germany, the eventual champion, were playing, the data showed.

Similar research was also conducted by the European Central Bank, which after the 2010 World Cup looked into minute-by-minute data for fifteen global exchanges including Brazil, the US, and the host South Africa. The researchers found that when a team was playing, the number of trades in the home country fell by 45% while volumes were 55% lower. Also, whenever a team scored, trading activity dipped by another 5%.

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