The Twitter IPO was a success because of human interaction, which is the makeup of the NYSE. It wasn't because of fancy computers and cerebral algorithms. It was, quite simply, people and the ability to communicate.
Twitter chose the NYSE not necessarily because of its storied past and evolution into the automated universe of electronic execution, but for its personal attention to detail. This is critical and remarkably valuable when finalizing multi-billion deals; and it's an X factor the electronic marketplaces just can't learn. Investment bankers and dealmakers realize these attributes are why the Twitter IPO was such a huge success.
The NYSE is about to rewrite its own story when the IntercontinenalExchange (ICE) finalizes its takeover of the company that started under a buttonwood tree way back in 1792. The deal is expected to close next week; and even though execs at ICE have said they plan to keep the trading floor, the financial services sector realizes this is not a binding promise. The end may not be around the corner, but it unfortunately isn't far away either.
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NYSE CEO, Duncan Niederauer, has been vocal over the years about his desire for an all-electronic, 24/7, stock market. Realizing his competition at places such as Nasdaq and BATS have created these networks, while serving as seeds for unregulated dark pools, Duncan believes this is the future for trading. As a result, deals—like the one with ICE—further promise more computers and less people. The result is likely to turn the NYSE upside down and make big physical events, like the Twitter IPO, unlikely to ever return.
The question then turns to the people of the NYSE: the humans who made the Twitter IPO a success. Some may retire, while others turn to a quieter workplace behind a computer and reflect on the way it used to be on the trading floor. Regardless, though, this group will always be part of that loyal fraternity known as the New York Stock Exchange.
NYSE historians and aficionados will note the irony of yesterday's robust traditional trading environment for a 21st century tech giant's IPO, just as the exchange re-engineers its own business model. But for a few hours, it was great and nostalgic to see the likes of Art Cashin, Doreen Mogavero and Kenny Polcari do what they have always done best: human trading. It's a lost art, but it was nice to relive it for what may be the last time.
Todd M. Schoenberger is the founder and managing partner of LandColt Capital LP, and serves as Portfolio Manager of the LandColt Onshore and Offshore Funds. Follow him on Twitter