You dont need a $2 million seat on the floor of the New York Stock Exchange to know that the venerable bourse has seen better days. Sure, the surroundings are glitzy thanks to a high-tech makeover and the presence of cameras and lights for daily business news programs but the days when a good chunk of Wall Street deals were made on the floor of the 222-year old NYSE are long gone.
As a reader of Traders, you already know this. But todays story in the WSJ brought it all home and bears some close reading. The NYSE is seeing lower volumes thanks to electronic trading and competition from dark pools and a more fragmented market that it once dominated. Now owned by the Intercontinental Exchange, based in Atlanta, some new ideas are headed to the exchange that is a fixture of the new York Financial District. So long, perks like a custom tailor and barbershop. Say hello to more open workspaces and a single coffee room to increase employee interaction.
If you didnt have the chance to read the entire (excellent) story by Bradley Hope, Traders chose the six most urgent and head-clearing take-aways from the article. Some of the sobering thoughts include:
A ripe target
On his first visit to the exchange, Thomas Farley, the 38 year-old NYSE president in charge of overhauling the exchange, says he got lost in the rabbit warren of hallways and wood-paneled offices,. He saw little interaction among employees, and some longtimers said they had never heard of colleagues who a few floors away.
Within minutes, Mr. Farley made a decision: “gut the place.
In their top to bottom review of the former NYSE-Euronext, ICE has cut the number of employees and contractors from 4,000 to about half that amount.
Plus, of the 22 people on the NYSE-Euronexts management team before the takeover, only three still work at ICE.
Intercontinental Exchange CEO Jeffrey Sprecher says he wants to pare the former NYSE Euronext companys five remaining stock and options exchanges down to about two. he also wants to focus more on on helping companies list their shares on the market — and less on the day to day buying and selling of shares.
Change is coming
Executive offices and the corporate boardroom will be converted into space for the NYSE-listed companies. ICE also is remaking a 92-year old trading area known as The Garage into a new options trading floor.
A decade ago. the NYSE handled about 80% of all stock trades in the US. Its market share is now 20%.
Its a former shadow of itself, Mr. Langone said. You could throw a bowling ball down the trading floor and not hit anybody. (Kenneth Langone is a Home Depot Inc. co-founder and former NYSE director.)
Its a sobering read and deserves your attention. One bonus tidbit: Not only does Farley keep a trading jacket from a floor broker at the NYBOT trading floor he closed, his workout class includes the actor Hugh Jackman. Perhaps he picks up a few tips from the Australian who portrays the X-Mens Wolverine for slashing slow-moving targets.