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Buy AX and NDAQ...like having a seat on the exchange.
My last post here...you folks are great. My husband needs my help.
Good trading.
Sallie
> NYSE's bell tolls for its trading floor
> Electronic deals to replace humans; firms already cutting
>
> By Aaron Elstein
> Published on August 01, 2005
>
>
> The New York Stock Exchange trading floor, for decades the symbol of
capitalism and of
Manhattan's financial power, faces extinction within a year's time.
> Once the 213-year-old institution finally bows to market pressures and
allows unrestricted
trading via computers this fall, its biggest customers will likely
execute most of their
transactions without human intervention. As a result, the roughly 3,000
floor traders and
clerks who now handle about 90% of the NYSE's business will be out of a
job.
>
> Firms that for generations have specialized in floor trading, such as
LaBranche & Co. and
Van der Moolen Holding, are already scrambling to overhaul their business
plans.
> "Business on the floor is going to dry up within six months," says
Christopher Keith, a
former NYSE chief technology officer who's now chief executive of
ExchangeLab, a Manhattan
firm that develops trading technology.
> Precedent points toward a quick demise for the floor once an electronic
alternative is
available. Nearly 20 years ago, the London Stock Exchange began trading
shares via
computers to supplement trading on the floor. Almost overnight, brokers
abandoned the
floor; inside of six months, the exchange decided to shut down its
centuries-old way of
trading.
> The NYSE might hang on a little longer. But experts project a sharp
drop in business once
the exchange starts lifting restraints to trading stocks electronically--
a move that will
begin in October, pending government approval. Wayne Wagner, chairman of
Plexus Group, a
Los Angeles firm that advises big investors on where to trade stocks,
reckons that as
little as 25% of the NYSE's business will be conducted on the floor after
the change.
> "There's already a real sense of idleness on the floor," Mr. Wagner
says.
> Even if the floor does go the way of ticker tape, the NYSE is likely to
remain the world's
leading stock exchange. The difference: Most of its trades will be
handled by its computer
system or by Archipelago, the electronic trading network that the NYSE is
acquiring.
> Exchange CEO John Thain thinks there will still be a place for the
trading floor in the
era of computerized deals, an NYSE spokesman says. While stocks in large
companies like
IBM trade so often that a person is seldom needed to match buyers and
sellers, exchange
officials believe that the human touch can help facilitate transactions
in shares that
change hands less frequently.
>
> Big issues dominate
>
> Trouble is, most of the NYSE's business comes from trading big stocks.
The exchange's top
500 issues account for 80% of its trades, according to research and
consulting firm Celent
Communications.
> What's more, it's by no means certain that the NYSE will retain the
lion's share of
trading in its 2,300 other listed securities. Regulations scheduled to
take effect next
summer will make it easier for struggling regional exchanges to seize
business from the
NYSE if they post the best prices for stocks.
> If investors turn en masse to electronic trading, Mr. Thain will have
little choice but to
abandon the trading floor. The NYSE, now owned by the floor traders, will
convert to a
publicly traded company after it acquires Archipelago. The institution
will then have to
answer to outside investors, who will have no patience for sustaining an
operation that
isn't pulling its weight.
> Although closing the floor would almost surely provoke a public uproar,
it could happen in
as little as a year, says Seth Merrin, CEO of Manhattan trading firm
Liquidnet.
> "People will gravitate to electronic forms of trading. That's what
they've done every time
they have had a choice," Mr. Merrin says.
> The demise of the NYSE floor would affect some of Wall Street's biggest
firms, including
Goldman Sachs and Bear Stearns. They employ hundreds of traders known as
specialists--the
auctioneers in particular stocks.
> But hardest hit would be LaBranche, the largest specialist firm, and
Van der Moolen,
another big specialist. They're trying to change their businesses to fit
the times and to
that end are shedding staff: LaBranche cut 70 employees, or 12% of its
workers, in the
first half of this year. The road has been rocky; both companies have
seen their share
prices tumble by more than 50% in the past two years.
> Rowland Fleming, who closed the Toronto Stock Exchange floor in 1997
when he was the
institution's CEO, says it's natural for floor traders to fight to
preserve the business
that has served them well. But ultimately, he says, the efficiencies that
stem from
automation can't be ignored.
> "There's no doubt that technology can replicate most if not all of the
activities on a
trading floor," he says.
>
>
> ©2005 Crain Communications Inc.
>
>
>
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