COVID-19

What all-electronic trading means for the New York Stock Exchange

Justin Ho Mar 23, 2020
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Spencer Platt/Getty Images
COVID-19

What all-electronic trading means for the New York Stock Exchange

Justin Ho Mar 23, 2020
Spencer Platt/Getty Images
HTML EMBED:
COPY

Starting today, the New York Stock Exchange’s trading floors are temporarily closed. Trading will continue during normal hours, but it will happen electronically. That means all those bustling traders you see on TV and in photos won’t be working on the trading floor.

The NYSE says it’s run plenty of tests and that its markets are fully capable of operating electronically. But NYSE President Stacey Cunningham says the market will be missing something.

“A computer doesn’t apply judgment quite the way people do,” she said.

For instance, when human traders meet on the floor and agree on a fair closing price, Cunningham says those prices tend to be more stable.

On their own, computers can cause prices to fluctuate.

“You want to know that when you bought or sold something, the price doesn’t rapidly change to a totally new value afterwards,” Cunningham said.

Electronic trading isn’t new. The NASDAQ is already a fully electronic exchange.

But Justin Schack at Rosenblatt Securities says the NYSE’s human traders have stepped in to stabilize markets when there have been software glitches, or during a financial crisis.

“In times of stress, it’s very important to have human beings involved and actively engaged in the trading process,” he said.

And with market volatility reaching levels we haven’t seen since 2008, Schack says, yes, this is a time when markets are stressed.

COVID-19 Economy FAQs

Will the federal government extend the extra COVID-19 unemployment benefits?

It’s still unclear. Congress and President Donald Trump are deciding whether to extend the extra $600 a week in unemployment benefits workers are getting because of the pandemic. Labor Secretary Eugene Scalia believes the program should not be extended, and White House economic adviser Larry Kudlow said the additional money is disincentivizing some workers from returning to their jobs. Democrats want to keep providing the money until January.

As states lift restrictions, are people going back to stores and restaurants?

States have relaxed their restrictions, and many of us have relaxed, too. Some people have started to make exceptions for visiting restaurants, if only for outdoor dining. Some are only going to places they trust are being extra cautious. But no one we’ve talked to has really gone back to normal. People just aren’t quite there yet.

Will surges in COVID-19 cases mean a return to lockdowns?

In many areas where businesses are reopening, cases of COVID-19 are trending upwards, causing some to ask if the lockdowns were lifted too soon, and if residents and businesses might have to go through it all again. So, how likely is another lockdown, of some sort? The answer depends on who you ask. Many local officials are now bullish about keeping businesses open to salvage their economies. Health experts, though, are concerned.

You can find answers to more questions here.

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