On the eve of a major contraction of its trading floor, the New York Stock Exchange says space for trading stocks won't shrink any further.
"We intend to have the floor as part of our market model as far as we can see out into the future. There are certain things that computers can't do," said NYSE Euronext President Duncan L. Niederauer, in a story in Sunday's New York Times.
The ultimate fate of floor trading has been debated for years. Most trades in NYSE-listed shares no longer go through the trading floor, but take place electronically, between the computers of buyers, sellers and intermediaries. Still, exchange-floor personnel won't become extinct, according to NYSE officials cited by the Times.
"Exchange officials said that they were revamping their operations to make the floor more integral, not less," the Times reported. "The opportunity to have people rather than computers make decisions on a customer's trade distinguishes the exchange from its all-electronic competitors like the Nasdaq stock market, they said."
Citing NYSE statistics, the article says floor brokers and clerks, known as the trading "crowd," today number about 1,700, compared with over 3,000 at their peak. The floor's share of trading volume in NYSE stocks has dropped from 80 percent to less than 50 percent in the past three years, and specialists and brokers together are involved in just five of every 30 trades. More telling, floor activities generate only 10 percent of NYSE Euronext revenue.
In the next several weeks, the NYSE plans to shut two trading rooms - leaving about half the trading space the exchange had at its peak. But, Niederauer told the Times, "I don't see it getting a lot smaller than that."
Others are less sure. Patrick J. Healy, chief executive of Issuer Advisory Group, which advises public companies, told the Times, "Whether the floor can survive is a 50-50 proposition. The answer is, we'll know soon."