In Change of Course, U.S. Markets to Close Today Due to Hurricane Sandy
By Adam Samson
U.S. equity markets will be closed Monday and potentially Tuesday as Hurricane Sandy threatens major market centers. As first reported by FOX Business, this move comes after a revolt against an initial NYSE Euronext (NYX) contingency plan that would have moved all of the exchange operator's trading to an electronic platform.
"The decision (to close markets) was made by the markets and market participants after careful consideration in consultation" with the Securities and Exchange Commission, an SEC spokesperson told FOX Business. "The SEC will continue to be in communication with the markets as the situation warrants."
Senior executives at several trading firms vehemently objected to NYSE Euronext’s initial plan to shift trading from the floor of the New York Stock Exchange exclusively to electronic venues, noting the dangers to the financial system of running a loosely-tested plan in regular trading. These people called for a new plan, including potentially closing New York trading for the day and keeping electronic trading available as an option.
The executives who convened on a call Sunday night said the unprecedented move to trade all NYSE-listed securities over the NYSE Arca system would represent a significant danger to both the financial system and these firms’ employees.
The move came in response to an order to evacuate a part of lower Manhattan where the New York Stock Exchange resides amid worries over the potential impacts of Hurricane Sandy, according to a press release issued earlier in the day.
According to several statements made on the hastily-arranged call, many firms will have to make technical changes to their systems in order to process trades through the NYSE Arca system.
“You’re creating a safety issue for our firms,” one NYSE client said on the call. The person said that employees would have to come in to offices across New York to make these changes. In addition, many nuances of the system have never been tested in the past despite a test some firms took part in earlier in the year, according to people on the call.
In particular, there were worries about order routing and opening and closing prints.
“Part of the problem is that while there’s been testing, we’ve gotten more skittish,” one person said, noting the flubbed Facebook (FB) IPO on the Nasdaq Stock Market.