Technology taking jobs at NYSE
Fewer needed on trading floor
By Joe Bel Bruno
Associated Press
NEW YORK - When the Dow Jones industrials crossed 12,000 for the first time last week, many of the people on the floor of the New York Stock Exchange were probably wondering if they'd be around to see the blue chips' next 1,000-point milestone.
Brokerages and specialist companies including Credit Suisse Group, LaBranche & Co. and others have begun to let staff go as the NYSE implements an electronic trading system that allows more automated transactions and reduces the need for humans on the exchange's famed trading floor.
The new technology is part of the Big Board's renaissance designed to make the exchange more competitive with the Nasdaq and other all-electronic markets.
"We've known for a while that there would be fewer people on the floor, and there are some of us that say there is going to be nobody left," said Steve Porpora, managing director of floor operations for securities company William O'Neil & Co. "I have faith, like with every other bit of new technology, we'll be able to do our jobs quicker and better."
The new hybrid system - named because it retains humans but has a greater dependence on computers - represents the biggest technical leap on the floor in some three decades. It automates some of the tasks that have long been performed by specialists, the people who match buyers and sellers.
As of Friday, some 80 NYSE-listed securities were handled through the system, and all the exchange's 2,700 companies are expected to be online in December. The implementation of the system coincides with the NYSE's need to comply with new Securities and Exchange Commission rules that require exchanges to become more competitive in executing trades.
That competition has already eaten away at some of the NYSE's market share - exchanges are now allowed to trade each other's stocks electronically, ending the exclusive listings that once limited where stocks could be bought and sold.
he Nasdaq Stock Market Inc. already claims the amount of NYSE-listed stocks traded through its own electronic system is growing. During the third-quarter, 12.1 percent of the Nasdaq's transactions were in shares listed on the NYSE - up from 4.7 percent a year earlier. The NYSE hopes to win back some of its business through the new hybrid trading platform.
Nasdaq Chief Executive Robert Greifeld took a swipe at the NYSE's system during a conference call with analysts. He called the platform "not very fast," and pledged to increase in coming quarters the amount of NYSE shares the Nasdaq trades.
The NYSE's parent, NYSE Group Inc., appears unfazed by Nasdaq's expansion plans.
Lou Pastina, head of the execution team for the NYSE's electronic system, expects the number of shares traded on the exchange to soar under a hybrid system.
"This is a competitive business," he said. "Investors are looking for the fastest services, the one that provides the best pricing will be the one to get the business. We're giving tools to do that, and to compete."
Some of the people who work the floor believe the NYSE's strategy will achieve that goal. Doreen Mogavero, a 30-year floor veteran and partner in Mogavero, Lee & Co., said she doesn't see things as "doom and gloom" and said the hybrid system presents new opportunities.
"Most of the people down here, even if they aren't as optimistic, are actively seeking to find their place in this new market," she said. "There's always opportunities in change, you just have to find it."
Still, some brokers on the trading floor might not get a chance to find their niche in a hybrid market. On Friday, Credit Suisse reduced its complement of 29 on the floor by cutting seven positions and transferring two others to its main office.
There is buzz on the floor and the rest of the securities industry about layoffs at other brokerage and specialist companies.
One floor specialist struggling for ways to adapt is LaBranche & Co. The NYSE's largest market maker reported its third-quarter profit fell on weaker trading revenue.
LaBranche has been trying to replace lost revenue through other businesses, including options and exchange-traded funds. The company has also been cutting staff in the past few years, and does not rule out further layoffs soon because of changes on the NYSE floor.
Chief Executive Michael LaBranche seems just as uncertain about the future as many of his employees.
"There's a lot of changes coming in our market," he told analysts during a conference call to discuss quarterly results.
"Our business today is in a transition mode. ... As a new technology is introduced, there will probably be further reductions in personnel on our trading floors," he said.
"How much of a reduction, I just don't know." |
