NYSE Euronext is preparing to submit details of the plan, whichwould permit computers to take securities to market just as humantraders have done on Wall Street for the last 221 years, to the USSecurities and Exchange Commission, The Wall Street Journalreported on the weekend.
The disaster plan would move trades on the NYSE to afully-computerized sister system, called Arca, while Wall Street’sfamed floor traders would be out of harm’s way. The transferal toArca would make it the ‘primary market’, responsible for settingopening and closing prices for securities, the US business dailyreported.
"The NYSE has to look at an extreme scenario in which theexchange would not be able to open or close and doing that in anelectronic format is something they have [discussed]," JonathanCorpina, senior managing partner at NYSE member firm MeridianEquity Partners Inc, told the Wall Street Journal.
Wall Street experienced in October 2012 its firstweather-related closure in more than 120 years when Hurricane Sandyswept up the US East Coast (Since 1885, the Wall Street tradingfloor has been closed 12 days due to weather conditions, accordingto exchange records). While it is difficult to put a price tag onwhat these closures cost investors, dozens of companies were forcedto postpone earnings reports because of the storm.
Earlier, following the terrorist strikes of September 11, 2001,the NYSE remained closed for four business days amid cleanupefforts. Traders and investors are now hoping to avoid suchlong-term closures in the future.
The disaster contingency plan, which has reportedly been on thedrawing board since 2009, comes as regulators have called intoquestion the markets’ ability to respond to crises, the paperreported.
Naturally, a move that sees computers replacing human trading onthe NYSE, which represents the last open outcry auction format inthe United States, has attracted protest from some members of WallStreet who are skeptical that any new technology can replace the‘human touch’.
"Companies don't list here to have their stocks open andclose electronically," Corpina added. "Companies pay apremium to have their stocks listed here, to be opened and closedand traded with human interaction."
Meanwhile, others believe that markets would simply stop tradingin the event of a major disaster, since few customers would bethinking about trading shares, according to the report.
