Moves aim to aid after-hours trading in war
March 20, 2003
BY DAVID ROEDER Business Reporter Advertisement
Chicago's financial markets took steps Wednesday to improve access to after-hours trading in case war developments create insatiable urges overnight to deal in futures on stock indexes or bond prices.
The exchanges are trying to head off any possibility that news, positive or negative for U.S. forces, could trigger a "fast market'' that locks up computer systems and prevents trades from being executed. Such a development could be costly for individual traders and brokerages.
The Chicago Board of Trade kept its trading floors open Wednesday night so members and their employees could use electronic terminals there. The terminals normally are used only during the day when the pits are active.
Officials said the terminals also will be accessible tonight. No extended sessions for pit trading are planned.
At the Chicago Mercantile Exchange, officials told members it will keep its Globex system open 24 hours if a "major geopolitical development'' occurs in the evening. Globex is usually down an hour each night, from 10 to 11 p.m., for maintenance.
Merc spokesman Bill Burks said the exchange always has allowed after-hours access to the terminals on its trading floors.
With war increasing fears of terrorism, the Board of Trade, Merc and the Chicago Board Options Exchange also are increasing security, but they declined to discuss specifics. Tighter security, including visitor check-ins and closures of public galleries, have been in place at the exchanges since the Sept. 11, 2001, terrorist attacks.
Board of Trade Chairman Charles Carey said member firms requested 24-hour access because many are increasing their own after-hours staff in case of a trading surge.
The move could be mostly symbolic. Through Globex or the Board of Trade's electronic network, a/c/e, firms can trade overnight from their offices, and many individuals have access from home.
But traders said the exchanges want to guarantee access in case of a spike in activity that can cause wild fluctuations in prices, especially when few people are in the market.
Michael Manning, president of Rand Financial Services Inc., said his firm is doubling the staff on its overnight desk to four people. "They basically volunteered because they figured that if something is happening, they want to be there,'' he said.
Manning and others said markets may react quickly to news that the war isn't proceeding well. Paul R.T. Johnson, chief executive of Boston Cabot LLC and a veteran trader, said that since stocks have rallied in anticipation of a quick war, setbacks could inspire a traditional "flight to quality,'' with investors fleeing equities and buying U.S. Treasuries.
The Board of Trade specializes in futures tied to Treasuries, crop prices and the Dow Jones industrial average. The Merc draws trading in futures on Eurodollars, which are used to speculate on interest rates, and the Standard & Poor's indexes.
About a million contracts are traded each day on Globex and 800,000 on a/c/e. Most of the business goes on during the day and night volumes usually slow to a trickle.
Many Board of Trade regulars recall the Persian Gulf War of 1991, which created business for evening sessions in pit trading the exchange used to operate. "It got really wild at times,'' said Johnson, who made special trips downtown to get into the action.
The exchange closed the night pit session in 1998 as the industry shifted to computer-based trading.
William Kaiser, president of the brokerage Zap Futures LLC, said his firm has increased overnight monitoring of trades to make sure volatile markets don't put customers in trouble.
But he's trying not to make too much of the war. "I don't know that I'd miss my bowling night'' to track how the markets react, he said. |
