The New York Stock Exchange made the decision this week to temporarily move to electronic trading, starting Monday, in response to COVID-19. It means closing down the trading floor at the corner of Wall Street and Broad Street.
For years, electronic trading has all but phased out the loud trading pits you’ve seen in movies and documentaries. But at the New York Stock Exchange, physical trading still matters.
The roughly 400 traders that mill around on the NYSE trading floor have certain advantages, according to Georgetown finance professor James Angel.
“They’re there, hanging out with the other traders, they hear things, they see things, they feel things,” Angel said.
That kind of information is valuable, especially at the end of the trading session. That’s when a special auction helps determine the closing prices for stocks. Angel said human traders can react to new information in real time and call up their clients and let them make decisions in real time.
Floor traders can also step in when technology doesn’t work. Back in 2012, a financial firm’s trading software accidentally bought and sold hundreds of stocks when markets opened.
Justin Schack, the head of market structure at Rosenblatt Securities, a big floor broker on the New York Stock Exchange, said that even though his firm wasn’t having the problem, they were still involved.
“There were folks on the NYSE [floor], including some of our people, that were involved with recognizing that and shutting down some of the stocks that had just opened at crazy prices,” Schack said.
Schack said having human traders together in a place where they can see and speak with one another is important during times of stress. Especially now, as we’re seeing huge market swings on a daily basis.
“Having human beings on the floor is especially important in a time like that,” Schack said. “It’s unfortunate that they’re not going to be there on Monday.”
The New York Stock Exchange says its markets are fully capable of operating in an all-electronic fashion.
“Running the NYSE fully electronically is something that we’ve tested with our customers repeatedly,” said Stacey Cunningham, president of the NYSE.
But she said that, in the long run, the market will benefit when it can return to a combination of trading technology and human judgment.
COVID-19 Economy FAQs
What’s going on with extra COVID-19 unemployment benefits?
The latest: President Donald Trump signed an executive action directing $400 extra a week in unemployment benefits. But will that aid actually reach people? It’s still unclear. Trump directed federal agencies to send $300 dollars in weekly aid, taken from the federal disaster relief fund, and called on states to provide an additional $100. But states’ budgets are stretched thin as it is.
What’s the latest on evictions?
For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.
Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?
Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.
You can find answers to more questions on unemployment benefits and COVID-19 here.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.