NYSE Euronext has launched a major renovation of its stock-trading floor.
Over the next 18 months, the exchange operator plans to demolish much of its Main Room where NYSE-listed securities are traded and build large sit-down trading areas for brokers.
The goal is to encourage brokers with existing floor operations to situate all or some of their upstairs trading operations on the floor, giving them a unified trading environment and, hopefully, generate more volume for the NYSE.
"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."
Currently, in the Main Room, broker booths ring the perimeter while specialist posts fill in the center. The booths are old–"decrepit," according to NYSE senior executive Larry Leibowitz–and require traders to stand up while working.
The NYSE plans to demolish many of the old booths and build large open trading areas that will be able to accommodate as many as 40 traders each.
The exchange also plans to upgrade its network, add new wallboards, outfit a booth for a major news organization and build a food court. It will also renovate the specialists’ posts by making them more open.
The finished product will likely resemble NYSE Euronext’s brand new NYSE Amex options trading floor. The floor is more open with wide countertops; a stark contrast to the closed-in environment of the Main Room.
The work will mostly be done on the weekends, so as not to disrupt trading. After the exchange finishes work on the Main Room, it will undertake a similar renovation of the Garage, its second trading room for NYSE-listed securities.
The exchange has divided the project into quadrants. It expects to be able to put about 15 firms in all four quadrants when the work is completed. It has firm commitments from five firms for the first quadrant, including one bulge bracket firm. It is in talks with six others. The rebuild is expected to appeal mostly to small and growing floor brokers trying to balance a floor presence and an upstairs operation.
The exchange would not divulge the cost of the project although it says it is partnering with the brokers to pay for it. Sources say the exchange is picking up the lion’s share.
Behind the move is the realization that most activity on the floor takes place at the opening and the close. In between those time periods, most trading is done upstairs. The exchange believes that many, mostly independent, firms would benefit by being able to do all their trading in one place. They would save on real estate costs and generate efficiencies by having all personnel in one place.
The exchange also hopes to see more trading happen on the floor. "A sales trader on the floor might be less likely to throw an order into an upstairs algorithm," Airo explains. "He would work it on the floor."
One of the firms with which the exchange is in talks is Rosenblatt Securities. With seven traders on the floor, Rosenblatt operates the largest NYSE-listed trading operation at the exchange. Rosenblatt has had an upstairs desk for twenty years
Dick Rosenblatt, chief executive of Rosenblatt Securities and an NYSE executive floor governor, says he’s not currently planning to move his upstairs operation down to the floor, but sees the benefit for some firms. "I think it’s most appealing for a firm that is trying to launch or expand an upstairs business," he says. "In growing anything, you are absorbing a lot of costs. Here the exchange is offering to help you defray that expense."
Rosenblatt also notes that floor brokers benefit from unique order types provided by the exchange that upstairs traders use through their floor brokers. A combined facility would ease that coordination.
