Will NYSE traders leave the floor?

Amy Scott Oct 6, 2006

KAI RYSSDAL: Two-and-a-half billion shares changed hands on the New York Stock Exchange today. Most of ’em in that controlled pandemonium they call the trading floor. People yelling out buy and sell orders and entering them into computers. The NYSE launched a new trading system today. Certain stocks can now go through one of those human beings on the floor. Or they can be traded purely electronically. For now it’s just two stocks. But it might only be a matter of time before the Big Board’s trading floor falls silent. Marketplace’s Amy Scott reports.

AMY SCOTT: You could almost hear the gloom in Ted Weisberg’s voice today. He’s president of Seaport Securities and has traded on the floor of the New York Stock Exchange for more than 35 years. Weisberg says the floor broker has had an advantage over the computer. Brokers knew who was buying and selling, could read the pulse of the market, and maybe negotiate a better price for their customers.

TED WEISBERG: Now, we will basically have to interact with the system electronically just like everybody else.

Weisberg can do that with his handheld computer. The New York Stock Exchange has spent months training brokers to adapt to the new system. It started with two today. But by the end of this year investors will have the option to trade all 2,700 stocks listed on the Exchange electronically. And analysts expect the bulk of customers will choose speed.

BILL CLINE: I think, in general, investors around the world, when given the choice, have already made the determination that they prefer to trade electronically.

Consultant Bill Cline with Accenture says customers may still choose the floor for larger or more complicated trades. But now that the Exchange itself is a publicly traded company, it has shareholders to please.

CLINE: It’s certainly an element of cost that a purely electronic exchange is not going to have. And so, you know, if the value proposition is not seen to justify the expense of continued operation of the floor, then I think you can see the end game.

Analysts debate how long open outcry will survive alongside automated trading. Few expect the kind of Big Bang that happened in London 20 years ago. The city’s trading floor closed within months of the debut of electronic trading. But industry analyst Sang Lee has an idea what might happen to that hundred-year-old building on the corner of Wall Street and Broad.SANG LEE: It would certainly make a very nice museum in terms of what the past was like.

In New York, I’m Amy Scott for Marketplace.

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