The New York Stock Exchange says all the right things in championing its iconic trading floor, but sometimes one has to wonder whether it really means it. Running a large trading operation for a dwindling number of floor firms and their mistake-prone traders was a questionable business practice even before they started giving each other COVID-19; sure, there are things only floor traders can do, but those things have gone undone over the last three weeks and the market has continued along. Perhaps it’s time for the trading floor to go the way of the open-plan office, or indeed offices altogether, and become a museum or a food court or a cat café or something else useful, if there are any tourists to whom such businesses cater.
But no! The trading floor will come back, long before anything else in New York City comes back, the day after Memorial Day, for a variety of reasons. Floor traders are feeling bereft and lonely in their suburban man caves, and also miss their precious D-quote perks. The NYSE’s co-owner, among other awkwardness, is in a battle for her so far short political life with Donald Trump’s preferred junior senator from Georgia, and is on record proclaiming the global pandemic NBD in an effort to appeal to the sort of Georgian who really, really needed a haircut, potentially fatal disease notwithstanding. And, more seriously (unless you are Kelly Loeffler), it seems floor traders do play an important role beyond keeping shoeshine men in the financial district in business.
Reducing volatility isn’t the only benefit floor traders provide. Grasso says without him and his colleagues volume could drop as some investors, worried about the lack of human intelligence, hold back…. Michael Blaugrund, NYSE chief operating officer, said: “I don’t want to say that when the floor is closed the markets are ineffective. But it is diminished. This is more than a soundstage or a colorful backdrop for TV. These people are interacting to provide price discovery,” he added. “And the net impact of their work saves all investors money.”
And so the show must go on. Not that it will be much of a show.
First, our “designated market makers,” who oversee trading in the securities of our 2,200 listed companies, will largely continue to do their jobs away from the floor…. Second, our floor brokers will return, though in smaller numbers at first, and will wear protective masks as they work. They will also follow strict social-distancing requirements, enforced by a new choreography that defines the space where each person may work on the floor…. The NYSE will also require all comers to avoid public transportation, which will limit their exposure and preserve capacity for others. Floor brokers and other visitors will be screened and have their temperatures taken as they enter the building. Those who don’t pass the check won’t be allowed to enter until they test negative for Covid-19 or self-quarantine in accordance with federal guidelines.
The NYSE Will Reopen the Trading Floor [WSJ]
With stock-exchange floor closed, traders and investors grapple with uncertainty [WaPo]
Sen. Kelly Loefller gives feds records related to insider trading claims [N.Y. Post]