NYSE Euronext and Nasdaq OMX Group Inc., the two biggest operators of U.S. stock exchanges, said they are prepared to open on Aug. 29 as Hurricane Irene threatened the first market shutdown due to weather since 1985.
Eric Noll, an executive vice president for transaction services at New York-based Nasdaq OMX, said the decision to open markets on Aug. 29 will be made jointly by markets and the Securities and Exchange Commission.
“We’re pretty certain we’re going to open on Monday morning,” Noll said in a phone interview today. “It will be a coordinated effort between us and the other markets and the SEC. It’s in none of our interest to have a non-coordinated open. To the extent we all agree we can be functional on Monday morning and the SEC is prepared to open, we are prepared to open.”
The storm forced New York Governor Andrew Cuomo to shut New York City’s transportation system and prompted Mayor Michael Bloomberg, the owner of Bloomberg News parent Bloomberg LP, to evacuate low-lying areas. Consolidated Edison said it will consider whether to shut power in lower Manhattan, where the New York Stock Exchange is located.
While the public face of U.S. equity trading is the New York Stock Exchange in Manhattan, about 13 percent of the nation’s volume took place on that venue in the past year. The rest is handled electronically, with orders matched in data centers in New Jersey and elsewhere.
Getting to Work
Louis Pastina, an NYSE Euronext executive, said yesterday that opening a day after the storm may depend on whether traders could get to work in Manhattan. Irene may be the most powerful storm to hit New York since Hurricane Gloria in 1985.
“If we can open here but none of our customers can get to their desks, it really doesn’t make a lot of sense to open the exchange,” Pastina, a senior vice president for NYSE Euronext, said in a Bloomberg Television interview yesterday.
NYSE Euronext said today in an e-mail to customers that it has completed preparations for the storm at its Manhattan headquarters and its data centers.
The Securities and Exchange Commission will consult with exchanges this weekend on whether to shut markets on Aug. 29, John Nester, a spokesman, said yesterday.
“We have been communicating throughout the day with markets and securities firms on whether the markets will be open Monday,” he said in a statement. “Discussions will continue Saturday and Sunday as appropriate. The markets will make the decision whether to open in consultation with the SEC.”
Hurricane Gloria, on Sept. 27, 1985, was the last time weather shut U.S. equities markets for an entire day. On Jan. 8, 1996, the New York Stock Exchange opened late and closed early after a snowstorm dumped 22 inches (55.9 centimeters) of snow on the city by dawn.
Stock trading stopped for four days after the Sept. 11, 2001, terrorist attacks on the World Trade Center in Manhattan. The most recent shutdown was on Jan. 2, 2007, to observe a national day of mourning for former President Gerald R. Ford, who died on Dec. 26, 2006.
“Post 9/11, we and other markets spent a great deal of time getting ready and building emergency disaster recovery-type functionality,” Noll said. Nasdaq OMX’s two disaster recovery sites “have ample sources of electricity, both public, generator and battery,” he said. “We can operate the markets fully without power for many days and are prepared to do so.”
Noll said key personnel were moved to the company’s two disaster recovery sites today as a precaution.
U.S. stock and option exchanges have held conference calls over the last few days among themselves, the SEC, the Financial Industry Regulatory Authority and the Depository Trust and Clearing Corp. about the likely impact of Hurricane Irene and whether the markets could operate, Noll said. Finra, based in Washington, oversees more than 4,500 brokers, while DTCC clears and settles stocks, corporate and municipal bonds, government and mortgage-backed debt and other products.
“It’s very unlikely we’ll have a situation on Monday where only some markets would open,” Noll said. “Even though there are public transportation issues in Manhattan and there’s a chance lower Manhattan may be closed, that doesn’t necessarily mean the markets won’t open on Monday,” Noll said. “They’d operate remotely.”
Noll said a decision on whether to open exchanges Aug. 29 isn’t likely until midday tomorrow in New York.