The New York Stock Exchange is preparing to close its trading floor as coronavirus sweeps through New York

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The New York Stock Exchange is preparing to close its trading floor as coronavirus sweeps through New York
trading floor

Reuters

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  • The escalating coronavirus outbreak in New York could prompt the New York Stock Exchange to close its trading floor.
  • The Big Board's contingency plan would replace its human-electronic broker hybrid with a backup system that hasn't yet been utilized during a real-world trading session, The Wall Street Journal reported.
  • While the trading floor no longer holds the importance it did decades ago, traders still organize end-of-session auctions that determine the closing prices for thousands of stocks.
  • All IPO activity would also be postponed until the trading floor reopens, according to a NYSE memo.
  • Visit the Business Insider homepage for more stories.

The New York Stock Exchange is preparing a coronavirus contingency plan that might close its iconic trading floor.

The move arrives as the coronavirus pandemic sweeps through the state, prompting work-from-home orders and "social distancing" measures to curb contagion. The NYSE's plan would shift its human-electronic broker hybrid to a backup electronic system that has been tested over weekends but not in a trading session, The Wall Street Journal reported Thursday.

The system would likely face sharp volatility should the NYSE's contingency go into effect. All three major US indices tanked enough on Thursday's open to trigger the second trading halt since Monday. The S&P 500 joined the Dow Jones Industrial Average in bear market territory and sat roughly 7.7% lower at 11:40 a.m. ET. The Dow sank more than 2,000 points, or 8.7%, as the bout of intense trading activity that began in February pushed forward.

While the NYSE trading floor no longer holds the technical importance it did before the rise of electronic brokerage systems, the traders who populate it still play crucial roles. The brokers are responsible for end-of-session auctions that set closing prices for thousands of stocks, according to The Journal. In the event of a floor closure, firms can connect to NYSE systems remotely to conduct the 4 p.m. ET auctions, according to an update sent to brokers.

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All initial public offerings scheduled at the NYSE would also be postponed until the floor reopens, the exchange said. The exchange is owned by Intercontinental Exchange Group.

The Big Board already limited the number of outside visitors and instituted additional cleanings this week to reduce the risk of spreading the virus and its related disease, COVID-19. Even if the trading floor is closed off, market activity will continue as planned, a NYSE spokesperson told Markets Insider.

"The NYSE is carefully monitoring the spread of COVID-19 and has robust contingency plans, tested regularly, to enable continuous operation of the NYSE exchanges should any facilities be impacted," they said in an emailed statement.

Additional steps taken to avoid spreading the virus include separate entrances and eating areas for floor traders and NYSE staff, according to a memo seen by Reuters.

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