NYSE Trading Floors Not Closing For Now As Coronavirus Worsens

The president of the New York Stock Exchange said Thursday there are no plans to close its iconic trading floor in the face of a worsening coronavirus outbreak.

"If there is an outbreak, we can clean the floor pretty quickly and reopen as well," NYSE President Stacey Cunningham told CNBC. "We are not planning to close the floor at this time,"

NYS is owned by Intercontinental Exchange Inc. (ICE)

However, on Wednesday, ICE, the exchange operator, issued an internal memo discussing possible ways to lower the risk of employees catching the virus on the trading floor, including the imposition of separate entrances and eating spaces for floor traders and NYSE and ICE employees who work at the office tower at 11 Wall Street.

CME Group (CME), the Chicago-based futures exchange operator said late Wednesday it will close its trading floor until further notice and that all of its trading will be done electronically.

(Nasdaq trading is entirely electronic)

Cunningham said NYSE can run entirely electronically, if necessary, and stocks can be opened and traded remotely. NYSE uses a hybrid model that employs both electronic systems and human traders, known as designated market makers, or DMMs.

Wall Street Journal reported that floor traders handle critical processes, especially during the 4 p.m. closing auctions which determine end-of-day prices for thousands of stocks. These closing prices are used as benchmarks by innumerable index funds and exchange-traded funds as well as futures and options contracts.

“The closing auction is arguably the most important moment of the trading day,” said Greg Tusar, a former global head of electronic trading at Goldman Sachs Group Inc. (GS). “Anything that happens to it that hasn’t been tested is a risk that is material in nature.”

Cunningham added: "There are more stocks that we actually want to apply that human judgment to because they open with less volatility and investors get better prices,"

NYSE has already imposed restrictions on outside visitors, often VIPs, executives or tourists, coming onto the trading floor.

“The NYSE is a unique meeting place for buying and selling securities,” an NYSE representative said. “While we constantly test our resilient systems that allow us to operate that meeting place in a fully electronic fashion -- which we did, successfully, as recently as last weekend -- we are also taking the necessary measures to help ensure that our iconic trading floor remains open for business during this volatile period.”

The Journal also reported that officials from the Securities and Exchange Commission recently discussed the backup electronic plan with executives from DMM firms and NYSE officials. SEC figures, including Division of Trading and Markets Director Brett Redfearn wanted to know how important functions like the closing auction would work if the trading floor was empty.

“Staff across the agency have been focused on the potential impacts of recent events on investors and our markets,” said an SEC spokesman.

For now, NYSE has upgraded overnight cleaning efforts, and retained an outside vendor to provide extra deep-cleaning on weekends.

“Given the critical work by our NYSE and NYSE American floor communities to underpin the orderly function of global markets, all of these efforts, and others, will remain ongoing until further notice,” said a memo from NYSE.