23 May NYSE Tour – April 2012
Last month, I had a wonderful opportunity to partake in a tour of the New York Stock Exchange, one of the oldest and most visible stock exchanges in the world. Since the 911 incident in 2001, tours of the NYSE were closed to the public and through my friends in NYC (thanks Michael and Eddie), I was able to gain access inside. The last time I was inside the NYSE was in 2006 and I have to say that a lot has changed since then. As we all know, long gone are the days when you see traders shouting and screaming on the floor of the stock exchanges. In fact, all of the major stock exchanges have changed to electronic trading and part of the allure of the exchange was the hustling and bustling of people. To me, this time it felt like I was inside an office building filled with rows of traders sitting in front of their computers and of course, you had business news networks like CNBC, Bloomberg and Fox news broadcasting the latest news on the floor.
The cool part of the tour was when we had a chance to see the control room where they monitored the price actions of all the stocks traded on the stock exchange. For some of you who remember the Flash Crash in May 2010, there was mass chaos when blue chip stocks like Procter & Gamble, normally trading in the $60 range, briefly trade under $1 per share before recovering all of its losses within minutes. This incident caused a black eye to the exchange who prided themselves on running a stable trading exchange. The exchange has since incorporated a circuit breaker when if a stock dropped more than 10% within a short period of time then the stock would get halted.
As well, I spoke to a few floor traders while I was there and they mentioned the lack of trading activity of stocks on the NYSE. It seems that since the financial crisis, a lot of people have stayed away from trading stocks. As well, high frequency trading firms which can sometimes account for more than 30% of an exchange’s trading volume are not doing well either and this has also contributed to a decline in trading activity.
Overall, I had an incredible experience of being inside an institution where billions of dollars are traded every day and would highly recommend a tour if possible. I will be posting videos shortly that I took while I was on the floor of the exchange. Stay tuned.