NY Stock Exchange trading floor closes for Sandy
Wall Street firms are preparing to open for business this week with skeletal staff, booking hotel rooms for key employees and leaning on offices in other cities as Hurricane Sandy forced the New York mass transit system to shut down, leaving tens of thousands of employees stuck at home.
Executives, traders and bankers said they expected a light trading day on Monday - and depending on the impact of the storm, possibly through Tuesday - as some offices in lower Manhattan's Financial District are in an evacuation zone and most non-critical staff were asked to work from home.
Major US stock exchanges, including NYSE Euronext, Nasdaq OMX Group and Direct Edge, and banks such as Goldman Sachs Group Inc, Citigroup Inc and JPMorgan Chase & Co were all putting in place contingency plans to open for business, but that involved some firms scaling back operations.
NYSE said it will close its physical trading floor operations for the first time in nearly three decades due to a weather-related emergency, but would move trading of NYSE-listed stocks to its fully electronic exchange.
It is also the first time NYSE has ever gone fully electronic.
Meanwhile, the exchange will evaluate on "a day-to-day basis" as to when it will reopen the floor, said Larry Leibowitz, NYSE's chief operating officer, but if forecasts are correct, the weather may worsen on Tuesday.
The decision to close the Big Board's trading floor came after a series of discussions with floor brokers, employees, city officials and others. Leibowitz, who lives in lower Manhattan, but not in the evacuation zone, said he would be showing up for work.
"I will be there ... I will probably be singing a solo on the trading floor," he said.
Hurricane Sandy is expected to slam into the US East Coast tomorrow, or Wednesday, bringing torrential rains, high winds, severe flooding and power outages.
The rare "super storm," created by an Arctic jet stream wrapping itself around a tropical storm, could be the biggest to hit the US mainland, forecasters said.
The scramble on Wall Street started early as New York Governor Andrew Cuomo announced the subway, bus and rail system in the city would close this morning.
About 8.5 million commuters utilise the Metropolitan Transit Authority's transit lines daily, meaning most Wall Street employees would be unable to get to work.
New York City Mayor Michael Bloomberg also closed public schools and ordered an evacuation of 375,000 people in coastal areas, including downtown offices of banks such as Citigroup.
The Street's contingency plans face several unknowns. The major exchanges and most big trading firms have alternate trading facilities if downtown Manhattan is inaccessible, but the storm's wide path may affect a number of sites in the New York metropolitan area. Authorities have warned of possible widespread power outages that could last for days.
Wall Street was spared the worst of Hurricane Irene in August last year. Officials had feared Hurricane Irene would flood lower Manhattan and cripple business in the world's financial capital, but the flooding was minor and there were no major disruptions at the exchanges.
CME Group Inc said it was suspending floor trade at NYMEX headquarters, the world's biggest oil and energy futures and options market. But electronic trade at all of CME will open at their regularly scheduled time at Globex and ClearPort, CME's online electronic platforms.
The Securities Industry and Financial Markets Association said it is recommending an early close for the trading of US dollar-denominated, fixed-income securities. It said its member firms should decide for themselves whether their fixed-income departments remain open for trading.
One bond trader at a large Wall Street firm said the New York-based banks would route orders through their Midwest and West Coast offices. West Coast employees were planning to get up early, he said, while colleagues in Europe were expecting a long working day on Monday.
Volumes were, however, expected to be lower and orders may be harder to fill, the trader added.
Ken Polcari, managing director for ICAP Equities, said: "The word going around the floor on Friday was people should expect this to happen. In the event the exchange does not open, they will trade electronically though."
"If that happened, it's probably going to be very muted volume," he added.
WORK FROM HOME
Goldman, whose office in lower Manhattan is in one of the areas to be evacuated, told employees that it would open for business, with some staff working from offices in Greenwich, Connecticut and in Princeton, New Jersey.
It also plans to use teams in London and other locations around the world for additional support.
Citigroup has its trading floor near the Hudson River in the Tribeca neighborhood in Manhattan, putting it in a flood zone. The bank is operating from a backup trading floor in New Jersey and will shuttle critical employees there as necessary. It said "non-critical personnel should invoke their work-from-home strategies."
Credit Suisse Group is situated by Madison Square Park in New York, outside of the city's evacuation zones for hurricanes. The Swiss bank planned to open its trading floor as usual on Monday, staffed with employees that live nearby and key personnel that can access trading systems remotely.
A JPMorgan spokeswoman said many of the bank's traders lived in Manhattan and will be in the office on Monday. The bank expects to be fully operational, using backup trading and technology from Europe or Asia as needed, she said.
Wells Fargo & Co, which has about 1,170 locations in Sandy's path, had already closed some locations by Sunday afternoon. Executives in various departments were holding conference calls to discuss preparations, a bank executive said.
The executive also said the exchanges' plan to stay open on Monday had complicated banks' preparations.
"With MTA shut down, how are people supposed to get around?" the executive asked.
PLAN TO STAY OPEN
The NYSE has not suffered a weather-related late opening since 1996, having opened on time in extreme circumstances in the past, including Hurricane Irene last year. It last suspended physical trading floor operations on September 27, 1985 due to Hurricane Gloria, during which all markets were closed.
The Big Board is located in Zone C, an area whose likelihood of evacuation is relatively low, according to the New York Office of Emergency Management.
The NYSE has arranged accommodations for essential staff near its lower-Manhattan headquarters, while other employees have been encouraged to work from home or alternate locations, said a person familiar with the situation.
Being on site is more important for traders that rely on fast network connections and real-time market information, than bankers such as deal advisers and private equity firm executives.
Blackstone Group, for example, planned to close its office on Monday.