the stock exchanges recognize this value and provide co-location etc to enable it
Not true. The exchanges charge hefty fees to colo in their datacentre. What you do with it is completely up to you. It's just more revenue as far as the exchange is concerned.
why are so many stock exchanges closed for half to two thirds of the day
In practice, this doesn't matter. When NYC closes, trading moves to Tokyo, then onto London, then back to NYC. Anything you want to trade, you can do so 24 hrs a day if you really want to.
You say you can trade around the clock by trading around the globe. But a position in New York can't exactly be liquidated in Tokyo. You can hedge for an approximation, but then you have cost of carry. Most markets are also completely closed on Sunday. It's not obvious to your parent why this should be. And don't even mention the half-day for stocks in the US around Thanksgiving, which is just silly.
Not true. The exchanges charge hefty fees to colo in their datacentre. What you do with it is completely up to you. It's just more revenue as far as the exchange is concerned.
why are so many stock exchanges closed for half to two thirds of the day
In practice, this doesn't matter. When NYC closes, trading moves to Tokyo, then onto London, then back to NYC. Anything you want to trade, you can do so 24 hrs a day if you really want to.