What all-electronic trading means for the New York Stock Exchange
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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
With a slow vaccine rollout so far, how has the government changed its approach?
On Tuesday, Jan. 12, Health and Human Services Secretary Alex Azar announced changes to how the federal government is distributing vaccine doses. The CDC has expanded coronavirus vaccine eligibility to everyone 65 and older, along with people with conditions that might raise their risks of complications from COVID-19. The new approach also looks to reward those states that are the most efficient by giving them more doses, but critics say that won’t address underlying problems some states are having with vaccine rollout.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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