The Demise of the Trading Floor
When the New York Stock Exchangeopened for business on September 17th, 2001 it was a powerful symbol of the nation's efforts to recover from the terrorist attacks.
The Big Board had been shut down by the attacks, which crippled the communications network of Lower Manhattan's financial district. But the determined leadership of the Exchange engineered the rebuilding of the communications grid in less than a week, allowing the Exchange to open for business.
That day the opening bell was rung by firefighters and policemen. The floor was crowded with public officials, including Sen. Chuck Schumer, D-NY, and then-mayor Rudolph Guilianni.
A decade later, the opening bell is still an important daily ceremony, attracting corporate chiefs and celebrities. But in the years since the terrorist attacks, the floor of the stock exchange has been transformed from a hub of financial activity into a largely symbolic location.
"I cannot believe how few people are on the floor these days," says Bob Cunningham, a member of the NYSE for 25 years. He has been off the floor for five years now.
There are still people on the floor of the exchange. They still trade, mostly handling large block orders for major institutional investors. But they are keenly aware that they are a dwindling lot. The number of brokers and clerks on the floor of the exchange has shrunk from a high of 3,000 to just 1,200.
The company that owns the exchange, now known as NYSE Euronext, is an international conglomerate of financial exchanges that stretches around the world. It is, at least in part, now a technology company. It handles trading in options, derivatives, and futures. Less than twenty percent of its annual revenues come from stock trading, and only a small percent of that is actually done by people on the stock exchange floor. Last year, only 5 out of every hundred stock trades conducted through the New York Stock Exchange passed through the hands of floor traders.
Trading, of course, continues. But most of it is now done entirely electronically. Even the tourists are gone, for the most part. The visitors' gallery, where tourists once flocked to watch the ringing of the opening and closing bells or just observe the buzz of the trading floor, is closed to the general public. Only those who have specially arranged guided tours can visit.
NYSE still touts the floor and the traders as essential to its brand. It is in the midst of a two-year long, multi-million dollar renovation of the trading floor. The disappearance of floor traders is partly a result of improvements in technology. Each of the dedicated market makers can handle far more trading than they could in the days of paper slips.
"So we have fewer DDMs handle more volume than ever before," a spokesman for the NYSE said, using the shorthand jargon for "dedicated market maker."
Cunningham says he finds the pace of the change on the floor stunning. "After 9/11 it became clear others that having one place that could be targeted for disruption was not a viable strategy. However, the speed and severity of the exodus was jolting," he says.
"We're a relic," said one trader who asked not to be named.
On Thursday afternoons, you can still find the floor traders gathering across the street from the exchange, at the bar inside Bobby Van's restaurant. They're recognizable by their comfortable shoes, a necessity if you spend much of the day standing at a trading terminal.
Art Cashin is their more or less official leader, and often enough he's holding court near the middle of the bar.
After a few drinks, some of the floor guys-and they are mostly guys-can be prompted to complain about the transformation. Some are a bit bitter. (One remarked, "The terrorists didn't get rid of us but the computers did.") But most are resigned to the change.
"When you make your living in the markets, you don't get to complain about change. Everything is always changing," one of the guys at Bobby Van's said on a recent Thursday afternoon.
More change may be coming soon. The stock exchange has announced its intentions to merge with the Frankfurt Stock Exchange. A spokesman for the exchange said that he is confident that the floor of New York Stock Exchange will remain open for business after the merger is completed.
"Some guys went outside after the earthquake. But I think it was just an excuse for a smoke break," one trader said.