ICE’s open outcry equities and options trading floors will close March 23 in response to the pandemic.
The New York Stock Exchange is temporarily shutting down its renowned outcry trading floor next week in response to the paramount concerns of protecting employees and floor traders amid the COVID-19 pandemic.
NYSE officials are launching a business continuity plan (BCP) and will transition “on a temporary basis, to fully electronic trading on Monday, March 23. Trading and regulatory oversight of all NYSE-listed securities will continue without interruption,” according to a prepared statement from parent company Intercontinental Exchange, Inc.
“All-electronic trading will begin with Monday’s market open. The facilities to be closed comprise the NYSE equities trading floor in New York, NYSE American Options trading floor in New York, and NYSE Arca Options trading floor in San Francisco,” according to officials.
“NYSE’s trading floors provide unique value to issuers and investors, but our markets are fully capable of operating in an all-electronic fashion to serve all participants, and we will proceed in that manner until we can re-open our trading floors to our members,” says Stacey Cunningham, NYSE president, in a statement.
“While we are taking the precautionary step of closing the trading floors, we continue to firmly believe the markets should remain open and accessible to investors,” Cunningham says. “All NYSE markets will continue to operate under normal trading hours despite the closure of the trading floors.”
The question of changing trading hours got major media attention when U.S. Treasury Secretary Steven T. Mnuchin suggested it during a COVID-19 update press conference on Tuesday, March 17. Advocates of the push for shorter trading hours for U.S. financial markets say it might curb volatility and thus calm the fears of investors.
However, the suggestion was met with stiff opposition in Chicago from the CME Group, a major operator of exchanges for derivatives.
“We were quite surprised to hear Secretary Mnuchin say he is coordinating with the New York Stock Exchange on possible shortened trading hours, even though he has not reached out to all cash equity and futures markets including CME Group and Nasdaq,” says Terry Duffy, CEO and group chairman of the CME Group.
“Shorter hours make no sense,” Duffy continues. “Financial markets are critical to managing risk and ensuring the resilience of the U.S. and global economies. Therefore, they must remain open, especially during this unprecedented crisis when news, information and events are changing at such a rapid pace.”
For the shutdown, NYSE officials say that there are “robust, regularly tested contingency plans in place to initiate fully electronic trading on its exchanges that have physical trading floors,” according to the NYSE statement.
“On the NYSE’s equities market, the Exchange’s Designated Market Makers will connect to the exchange electronically to provide liquidity in their stocks, however floor broker order types will be unavailable,” officials say. “On the NYSE’s options markets, electronic trading will continue normally but open-outcry trading will be suspended with the closure of the options trading floors.”
Other open outcry trading venues made the transition sooner than ICE/NYSE.
On March 15, Nasdaq announced that “the Nasdaq PHLX Options Market trading floor in Philadelphia will temporarily close on Tuesday, March 17, until further notice; all options trading will transition to an electronic-only environment,” according to an official statement.
“All electronic Nasdaq-operated equities, options, and fixed income markets will remain in operation during this period, with only critical operational personnel on-site working in either split teams or rotating staff schedules,” according to Nasdaq
Overseas, the COVID-19 concerns hit home for Dubai Financial Markets (DFM) officials, who announced on Monday, March 16, that they would be closing open outcry on its trading floor. Instead, market participants will use DFM online electronic transaction system or the systems of their brokers. The Abu Dhabi Securities Exchange has also halted outcry trading.
For the moment, these exchange operators are not announcing when they will reopen their outcry trading floors.
“Intercontinental Exchange will continue to monitor events to determine the appropriate time to re-open the NYSE trading floors,” say officials there, echoing what other exchange operators are saying.