Nov. 11, 2009 -- Buy! Sell! Spackle! Caulk!
These days, amid all of the stock trading on the famous floor of the New York Stock Exchange, an interior renovation project is under way.
One side of the exchange is being transformed into something more modern, a brand new wing with sleek, multi-computer-screen-splendored seating areas fit for a starship trooper. There are plans next year for an equally ambitious makeover on the other side of the exchange's football-field-sized floor -- actually five large adjacent rooms.
This effort to refurbish the physical beating heart of global capitalism, where billions of shares of stock are traded most weekdays from 9:30 a.m. to 4 p.m., is not just to make the place more aesthetically pleasing. The goal is to create a much more attractive business environment for traders -- many of whom have been leaving the floor in droves this past decade.
Put simply, the relevance of the NYSE floor -- once among Wall Street's most exclusive and profitable memberships -- has, steadily, gone the way of Members Only jackets.
Despite the lively but strictly ceremonial opening and closing bell rituals shown on cable news, actual trading on the exchange's floor has been slowing considerably.
While there still are trades with real human beings – floor brokers, clerks and market makers – yelling buy and sell orders at each other, the viability of the exchange has been upended by the rise of computerized trading systems and electronic "liquidity venues," cyber markets, or what the floor denizens collectively call "upstairs."
This trend, as relentless as the one that punished stubborn buggy whip manufacturers at the turn of the prior century, has eroded the ability for the NYSE's lifeblood -- human traders -- to make a living. Activity on the floor, particularly between the opening part of the session and the last hour before the close, has been fading.
Wall St. Gets a Face Lift
How bad has it gotten?
Five years ago, 85 percent of trading at the NYSE involved humans on the floor. Now only 15 percent of the shares that change hands involve ones that actually belong to humans.
More than 3,300 traders manned posts and booths executing orders on the floor five years ago; today, around 1,000 remain, using 60 percent less square footage.
To draw more traders to the floor, the exchange decided it was time for a facelift, said Ray Pellecchia, a spokesman for NYSE Euronext, the publicly traded parent of NYSE.
Starting two months ago, the NYSE began a dramatic physical makeover, its largest such endeavor since 1993-94, when traders (then known as "specialists" and now called "designated market makers") were assigned state-of-the-art dealing stations with flat-screen monitors, which were not ubiquitous as they are today.
To be completed over roughly the next 18 months in three stages at a cost not likely to exceed $5 million, the retooling will transform the entire back side of the NYSE's main trading space (nicknamed "the Main Room") installing a sparkling new wing that will replicate a modern office trading floor, the kind that might be found "upstairs" at a major bank's office tower.
Turning the Tide
While the NYSE has a modern-looking center area, with sharp-looking market-making stations that are fully computerized, the perimeter of the exchange is cramped, standing-room-only, and, in a word, outdated.
This part of the exchange is home to NYSE members called "floor brokers" who interact with designated market markers. Each of the companies that lists their shares on the exchange is assigned to a designated market maker, who usually handles more than one company's shares. The market makers punch trades into computers, taking orders from floor brokers who are aided by handheld computers and their "clerks" who man banks of phones linked to the outside world. Many floor brokers are stationed in wooden booths more suited for a boardwalk arcade than the NYSE.
Wall St. Gets a Face Lift
"When we are finished with phase one, brokers will have a place to sit, access to multiple screens, in line with any upstairs trading room," said Lou Pastina, director of floor operations for the NYSE.
At present, the core area undergoing renovation is cordoned off by a brown painted wall that runs the length of the main room. "Mr. Pastina, tear down this wall!" a nearby trader quipped, referencing the 20th anniversary of the fall of the Berlin Wall being shown on television.
ABCNews.com was given a brief peak beyond the wall – basically, it was one huge empty space with some tarps (not quite as vast as the ones thrown across the investment banking industry, but sizable).
Interest from floor brokers in the new space, once it is ready, is robust. Several firms, such as Barclays, are moving in, expanding their presence on the floor. "We're fully booked up for the new section," Pastina said.
Pellecchia insists that, despite the trend toward electronic trading, the traders and brokers on the floor of the NYSE saw more market share in the past year, especially during turbulent, high-volume periods, stressful sessions when buyers and sellers move large quantities. And there has been more activity in the past two months.
"The renovation project builds on that momentum," Pellecchia said.