Big Board Plans To Close 20% Of Trading Floor Cost-Cutting Move Highlights
Rise of Electronic Transactions; 'Just the Beginning,' Says Analyst
The New York Stock Exchange, in a symbolic decision that underscores the decline of floor trading amid the rising popularity of electronic trading, plans to shut about 20% of its floor-trading space in the next 18 months.
The Big Board -- practically the last bastion of the centuries-old system of putting together investors through auctions on a hardwood trading floor -- announced the move late yesterday, saying it would cut costs. Costs have become an increasing focus for NYSE Group Inc., the new for-profit parent company of the NYSE that resulted from the March merger of the Big Board and electronic exchange operator Archipelago Holdings Inc.
The 214-year-old exchange, of course, is still committed to running part of its business on the floor. The exchange will have four remaining trading rooms -- the Main Room, the Garage, the Blue Room and the Extended Blue Room -- with about 36,000 square feet. The floor the NYSE plans to close, called the New Room and a few doors away from its landmark building in Lower Manhattan, has about 10,000 square feet.
"It's just the beginning of the floor closings," said Richard Repetto, an analyst with brokerage firm Sandler O'Neill & Partners LP.
The NYSE was founded in 1792, when trading occurred outside under a tree. The floor moved indoors in the early 19th century and relocated to its current landmark building in 1903 and has grown significantly since then. Former Big Board Chief Executive Dick Grasso considered building a new trading floor and NYSE headquarters near its current building on Wall and Broad Streets in Lower Manhattan, but abandoned the idea after the Sept. 11 terror attacks.
The decision by NYSE Chief Executive John A. Thain, comes as the exchange removes restrictions on electronic trading on its floor and as more business migrates to electronic systems like NYSE's Arca platform and Nasdaq Stock Market Inc., an electronic exchange that has been stealing market share from the NYSE recently.
The stock-trading business has been under pressure in recent years to remove the human middlemen with computer servers that match buyers and sellers for less money and at a much quicker clip.
The floor shrinking comes amid rapid change among financial marketplaces. Over the past few years, exchanges have transformed into for-profit companies that have shareholders including hedge funds and other professionals that want to see cost cutting and increased profits.
The quickest way to do that is to steer more trading to electronic systems. Chicago Mercantile Exchange Holdings Inc. has ridden this strategy to rapidly increased profits and said recently as part of its announced merger with CBOT Holdings Inc. that the CME and the Chicago Board of Trade would merge their two trading floors into one.
"It's not surprising," said Warren Meyers, a broker on the NYSE floor with Walter J. Dowd Inc. "In a for-profit environment, they're looking to cut costs. There's downsizing at a lot of firms."
Mr. Meyers estimates that the number of floor traders is down 10% this year. Exchange officials and traders estimate that the number of traders and clerks overall working on the floor has declined to about 2,500 from more than 3,000 at the peak a few years ago.
The move represents another challenge for the elite floor trading firms known as specialists, which oversee the auctions in individual stocks and keep price moves orderly by putting buyers and sellers together and trading for their own accounts. Those firms -- which include Bank of America Corp.'s specialist unit, Bear Stearns Cos.' Bear Wagner unit, Goldman Sachs Group Inc.'s Spear, Leeds & Kellogg Specialists LLC, Van der Moolen Holding NV's specialist unit and LaBranche & Co. -- are being forced to handle more of their business with fast-moving computer programs and starting to think about whether they could be as successful trading away from the NYSE floor. At LaBranche., one of the largest specialist firms, the number of people working on the floor has dropped by 50% since the peak number in 2001.
Trading floors have become not only less popular in recent years, but have also become more expensive to maintain. Yet, floor trading in some markets remains strong despite technological advances. For instance, floor trading in futures markets in both Chicago and New York remains popular among certain contracts.
"With the rise of electronic trading, the NYSE floor will continue to have an important, but smaller role," said David Cummings, head of BATS Trading, an electronic trading platform that caters to firms sending their orders over computers. "Cutting their overhead makes lots of sense."
About 500 stocks including Procter & Gamble Co., Citigroup Inc. and Xerox Corp. trade in the New Room, a well-lit state of-the art rectangular trading space completed in 2000, just as the market was peaking. Some traders joked yesterday that the exchange has a habit of adding new rooms at inopportune times, including near the time the stock market crashed in 1929 and 1987 and near the top of the late 1960s bull market.
This time, though, the change is likely to be more permanent. The exchange doesn't own the New Room or the office space above it, according to a person familiar with the matter. Instead it rents under a lease due to expire in 2008 and can cut its real-estate costs by moving out and consolidating in the trading space that it owns. The potential cost cuts weren't previously included in the company's earnings projections, this person said.
As the exchange adopts more electronic trading under Mr. Thain, fewer floor traders are needed to handle the roughly 1.8 billion shares that trade on the exchange on an average day. Mr. Thain said in a speech yesterday that electronic systems on a trial run a few weeks ago handled six billion shares in about two hours.
"We are taking out a huge number of the keystrokes for the clerks on the floor of the exchange," said Mr. Thain, referring to the fast-typing traders who manage orders to buy and sell shares. Mr. Thain added that the exchange is large enough to shoulder the costs of some floor trading. "I believe our floor adds value," he said.
Under yesterday's changes, about 250 people, including brokers at 33 firms, that used to operate in the New Room will be transferred to the four other rooms. The firm most affected by this will be Bear Wagner, which has most of its operations there.
纽约证交所计划“瘦身”
纽约证券交易所(New York Stock Exchange)计划在未来18个月内将交易大厅面积缩减20%，这凸显出纽约证交所在电子交易日益普及的情况下收缩交易场地的决心。
纽约证交所于10月31日晚间宣布了此项决定，并表示此举旨在削减成本。该证交所3月份与电子交易运营商Archipelago Holdings Inc.合并，组建了NYSE Group Inc.，而成本已成为NYSE Group日益关注的重点问题。
不过，这家拥有214年历史的交易所仍将通过大厅交易执行部分业务。交易所将保留4个交易场地──Main Room、Garage、Blue Room和Extended Blue Room──总面积达36,000平方英尺。纽约证交所计划关闭的场地为New Room，它与位于曼哈顿下城的证交所主楼相隔不远，占地面积10,000平方英尺。
券商Sandler O'Neill & Partners LP的分析师理查德?芮佩托(Richard Repetto)说，“这只是关闭交易大厅的开始。”
1792年，从事股票交易的经纪人在华尔街的一棵树下集会，宣告了纽约证交所的诞生。十九世纪初，交易转向室内，并于1903年迁入目前的主楼，此后交易活动迅速活跃起来。证交所前主席迪克?格拉索(Dick Grasso)曾考虑在其位于曼哈顿下城的证交所大厦附近建立新的交易场地和总部。但911事件后他们取消了此项计划。
现在，随着证交所取消在场地内进行电子交易的限制，加之越来越多的企业开始转向纽约证交所Arca平台和那斯达克市场等电子交易系统，NYSE总裁约翰?赛恩(John A. Thain)决定关闭部分场地。
近些年证券交易业务一直面临着由人工撮合转到电脑交易的压力，采用电子交易无疑能帮助买家和卖家节省交易成本并加快交易速度。
金融市场领域的迅速变革也是促使纽约证交所关闭场地的重要原因。近几年，各大证交所已经普遍转变为盈利性企业，拥有包括对冲基金和其他专业机构在内的众多力求削减成本和提高利润的股东。
而削减成本的最佳途径就是交易电子化。芝加哥商业交易所(Chicago Mercantile Exchange Holdings Inc.)已凭藉这一策略迅速提升利润，并宣布与芝加哥商品交易所(CBOT Holdings Inc.)合并后将把两个交易大厅合二为一。
“这毫不奇怪，”纽约证交所场地交易员、Walter J. Dowd Inc.的沃伦?梅耶斯(Warren Meyers)表示。“在一个以赢利为目的的环境中，他们必然要削减成本。很多企业都在瘦身。”
梅耶斯估计场内交易员的数量今年将缩减10%。交易所管理人士及交易员也估计，场内交易员及工作人员将从几年前高峰时期的3,000多人降至2,500人左右。
此类举动必然给纽约证交所的特设经纪商（多为华尔街知名证券公司）带来新的挑战。证交所大厅内有很多特设经纪商在协调个股拍卖，撮合买卖双方的交易，有时也操作自营交易，其中包括美国银行(Bank of America Corp.)旗下专业交易子公司、贝尔斯登(Bear Stearns Cos.)旗下Bear Wagner、高盛(Goldman Sachs Group Inc.)的Spear, Leeds & Kellogg Specialists LLC、Van der Moolen Holding NV的专业交易子公司和LaBranche & Co.等。随着电子交易系统逐渐普及，它们被迫把更多业务交给更快捷的电子系统处理，并开始考虑能否在NYSE的大厅以外取得同样的成功。作为最大的专业交易公司之一，LaBranche自2001年以来已经将场内专业交易人员的数量砍掉了50%。
近些年，在大厅交易渐受冷落的同时其维护费用却越来越高。不过，在某些市场，技术的进步并未改变大厅交易的作用。芝加哥和纽约的期货交易仍有部分合约以大厅交易为主。
BATS Trading为参与电子交易的公司提供交易平台，该公司负责人大卫?卡明斯(David Cummings)表示，“虽然电子交易日益普及，但纽约证交所的大厅交易仍将扮演重要角色，不过它的作用会有所减小。削减费用势在必行。”
New Room在2000年股市接近顶峰时启用。包括宝洁(Procter & Gamble Co., 又名:宝硷公司)、花旗集团(Citigroup Inc.)和施乐公司(Xerox Corp.)等500多只股票在这个宽敞明亮、风格前卫的矩形大厅里交易。一些交易员不久前还开玩笑说，纽约证交所就喜欢在股市泡沫破灭前增加场地，1929年、1987年以及六十年代末牛市行将结束时都是如此。
不过这次缩小面积是出于长远考虑。据知情人士称，交易所并不拥有New Room及其上面的写字楼空间，而是通过2008年到期的租约租用。将交易活动整合到交易所其他交易场地中，这部分物业成本就可以降下来。该知情人士称，公司此前发布的收益预期中未考虑上述举动可能产生的成本节约。
随着纽约证交所在赛恩的领导下越来越多地采用电子化交易，处理该交易所日均18亿股的股票交易量已经不再需要那么多的交易员。赛恩在周二发表讲话时称，几周前试运行的电子交易系统可在两个小时内处理60亿股。
赛恩表示，“我们将撤掉大量执行操作指令的交易员。”不过他补充说，凭藉纽约证交所的规模，证交所能够承受一些场内交易的成本。“我认为我们的场内交易仍然能够给公司创造价值，”他说。
根据周二的决定，New Room中来自33家券商的250名交易员将被转至其他4个场地。受影响最大的券商当数Bear Wagner，该公司的多数业务在New Room执行。此前一些股票有某些类别的交易指令不能通过电子交易完成，纽约证交所于上个月取消了这些限制。截至10月24日，通过电子系统达成的股票交易量在交易总量中占到了80%，远高于电子交易系统推出前的18%。电子交易的平均处理时间为每笔0.3秒，也远远少于以前的8至9秒。
Aaron Lucchetti
