When does safety supersede symbolism?
In the case of the New York Stock Exchange, it may be as early as this week following another emergency rate cut by the Federal Reserve on Sunday to combat the financial fallout from the coronavirus crisis.
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While FOX Business has been told by the exchange’s media relations department as recently as Sunday afternoon that the famed floor in lower Manhattan will open tomorrow, one-floor trader who preferred to remain anonymous but has worked at the NYSE for more than two decades says, “(The Wall Street trading floor) may be federally ordered to close. The situation is changing day by day, hour by hour.”
Another floor trader said his sources indicate a more pointed possibility. “There’s an 80 percent chance that Tuesday or Wednesday it will be mandatory that the floor shuts down.”
“There’s an 80 percent chance that Tuesday or Wednesday it will be mandatory that the floor shuts down.”
In a statement to FOX Business Sunday at 4 PM, NYSE media relations said:
“We appreciate that the nation and the world have their eyes on the New York Stock Exchange as both functionally and symbolically important to public confidence and maintaining an orderly market during these volatile times.
As such, NYSE has taken a number of steps to protect the health and safety of the NYSE community and, importantly, to work to keep the NYSE equity and options trading floors open for business in the days and weeks ahead.”
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But if the CME-- considered the world’s largest futures and derivatives trading floor and platform--is any indication, the NYSE traders may be asked to stay home. The Chicago marketplace, which dates back to 1898, shuttered its trading floor Friday until further notice.
While the CME said it has no coronavirus cases among its Chicago Board of Trade trading floor community, the closure decision was taken as a precautionary measure. The CME is the first major U.S. exchange to close. Trading will continue electronically but the ‘open-outcry’ --the method that consists of floor traders standing in a trading pit to call out orders, prices, and quantities of a particular commodity or its derivatives--does not allow for the social distancing now being called for by authorities across the nation to help prevent the spread of the virus.
As of Saturday, the state of Illinois had a total of 93 cases of the coronavirus, 29 more than the day before. New York State’s latest number of cases has risen to 729.
NYSE management says during any floor closure, the exchange would operate on a fully electronic basis and would permit Designated Market Makers to operate Quadruple Witching Occurs the third Friday of every March.
When FOX Business inquired of floor traders how quadruple witching ---the expiration of market index futures, market index options, stock options and stock futures--would work without floor traders, one trader told FOX Business that electronic trading can handle all quadruple witching volume which tends to increase on expiration days.
Electronic trading is handled by NYSE Arca, its electronic securities exchange.
Sources say the open-outcry system at the NYSE is something management has been preparing to trim for years but that the pandemic fears have worked in reverse. “For years, ICE (Intercontinental Exchange and parent of the NYSE) has made no secret of the fact that they wanted to shut us down. That all changed two weeks ago. Suddenly they were doing everything in their power to keep the floor open. The optics of the stock exchange closing would be very bad for market sentiment.”
Following the publication of our story, a NYSE spokesperson denied the claims and in a statement said:
“That is patently false, and our efforts this week reflect that."
The NYSE did tell FOX Business Sunday, “Moving forward, on a temporary basis, all NYSE employees based in the 11 Wall Street building who are not required to support floor trading or a limited number of building activities, will work from home. This measure will greatly reduce the number of personnel who are entering the building and interacting with members of the floor community.”
Separately, S&P Dow Jones Indices confirmed to FOX Business the quarterly rebalancing of its global equity indices originally scheduled to take effect before markets opened on Monday, March 23 has been postponed.
“We believe this was a prudent step as we thoroughly assess how we can best support our clients and manage our indices during this period of extreme global market volatility and market disruptions. We will provide additional guidance to our clients and market participants on index rebalancing schedules soon” said a spokesperson in a statement.
The move could reduce pressure on trading systems.