Storm Over Wall Street Going Dark
Traders Magazine Online News, November 12, 2012
And if brokers or NYSE members with the same information about a weather-related emergency don’t get prepared by updating their connections to a known backup plan long in advance, it’s not necessarily an exchange’s fault if its members are not ready, at the last moment.
“Whose responsibility is that?” asked Toes.
In fact, there may be some trading firms that do not want to invest in backup systems, said Alex Tabb, a partner at industry consultancy Tabb Group.
So setting up shop in a backup site, such as NYSE Arca, can be as expensive as setting up in a primary site. And each backup site required adds cost.
Which is a cost that a high-frequency firm, operating on a margin of less than a penny a trade, may not want to pay, Tabb said.
But, if you are set up, adjusting to the NYSE’s backup plan would have or should have been easy, said Jeff Bell, chief executive officer of Lime Brokerage, a unit of Wedbush Securities that develops high-speed technologies in order to provide “direct access catering” to traders, hedge funds, and institutions. Lime connects to all the stock exchanges operated by NYSE Euronext, Nasdaq OMX, BATS Global Markets and Direct Edge.
“All that would have happened, in my view of things, was we would have taken down the routes to the New York Stock Exchange proper” only, Bell said.
“What is different, at some other firms, is they maybe don’t trade all the markets,” he said. “They really just need to get an execution done and they like to go to the New York (exchange) because they've been doing it for decades. But if all of a sudden that execution venue is gone, they’ve got to find another way to work around” that.
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