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September 9, 2009

Upstairs Downstairs

NYSE Looks To Capture Flow By Transforming Its Broker Booths

By Peter Chapman

After standing for the past 200 years, floor brokers at the New York Stock Exchange are finally being offered a seat. Over the next 18 months, the division of NYSE Euronext plans to demolish all of the standard booths in its Main Room where NYSE-listed securities are traded and build large sit-down trading areas for their inhabitants. Once that project is completed, the New York plans to renovate the Garage, the other room used to trade NYSE-listed securities.

Bob Airo, NYSE

The goal is to bring volume back to the floor or, at least

keep it from leaving the floor by encouraging floor brokers to expand their operations on the floor or bring their upstairs desks down to the floor. In the past few years, several of the independent brokerages have built, or made plans to build, upstairs desks. As they move upstairs, they do more of their trading away from the floor.

"We are going to create a refreshed look for the floor trading community and create traditional trading desks," Bob Airo, a senior vice president for NYSE market operations, told Traders Magazine. "A floor-based firm could bring its whole upstairs trading desk down to the NYSE floor."

MND Partners, Mogavero Lee &Co., Meridian Equity Partners and Cuttone & Co. are four of the five firms that have agreed to move into the new trading pods. All four are independent floor brokers. Meridian and Cuttone operate upstairs trading desks, as well

 

Generate Efficiencies

MND Partners, in the midst of a hiring spree, recently looked for space at 14 Wall. It opted to go with the New York's plan instead. "We have looked at real estate recently, but this is the best alternative," said Neil Catania, MND Partners' chief executive. "Being at the point of sale really works for us." Due to increased demands for speed from customers and the related data-latency issues, Catania believes being together in one space is most effective.

Behind the NYSE's move is the realization that most activity on the floor takes place at the opening and the close. Between those time periods, most trading is done upstairs. By enticing upstairs desks down to the floor, the exchange believes it will garner more flow during the slow period. The pitch to the mostly independent firms is that they will save on real estate costs and generate efficiencies by having all their personnel in one place.

Neil Catania, MND Partners