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The Fate of NYSE Floor Traders Is...

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."

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AUTHORAnonymous Insider Comment
  • JW
    J Whip
    27 September 2007

    Goldman Sachs always craved the demise of the NYSE.They finally got their wish.

  • ex
    ex-JPMorgan
    25 September 2007

    I don't know how many people recall that in 1999 NYSE and the City was trying to get JPMorgan to vacate its 15 Broad location to make more room for its trading floor. The conventional wisdom said that if anything they will have to reduce their floor.

    On the other hand, it is sad to see the glory of downtown area slowly giving way to apartment buildings. NYSE might just become another apartment complex with a NYSE facade and a small museum.

  • Jo
    Joe Trader
    25 September 2007

    NYSE uses wrong numbers. At peak -- many, many more than 3000 were employed on NYSE floor (closer to 5000). Today real working number is under 1000. Soon NYSE will need to use its own employees to be specialists. Pat Healy always really sounds intelligent until he opens his mouth...

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