20 years after London, NYSE has its Big Bang
Andrew Clark in New York
Friday October 6, 2006
The New York Stock Exchange will take its first step towards London-style electronic dealing today in the face of increasing international competition.
In a gradual transition, the NYSE is introducing a "hybrid market" allowing traders to buy and sell big chunks of stock at the touch of a button.
Its move is comparable to the London exchange's "Big Bang" in 1986 which led to the end of the City's trading floor - except that the Big Apple's changeover will be slower, more considered and, it is hoped, less likely to contribute to a crash akin to Black Monday in 1987.
Technology will vastly increase the NYSE's capacity. In a test on Saturday, more than 6bn shares changed hands in two hours - exceeding the exchange's record of 3.1bn for an entire day.
The changeover is nothing if not cautious. On the first day, just two stocks - American Express and Equity Office Properties Trust - will be traded under the new technology. In a gradual roll-out, all 3,600 listed companies will be included by December.
Previous electronic transactions at the NYSE were limited to small deals of 1,099 shares at a time. The new limit will be a million shares and a restriction of two trades a minute will be lifted.
Its certainly going to speed things up. The human element was like a braking mechanism. So we ought to be at full throttle by December with no emergency brake. The mutual fund traders with their star wars technology buy and sell programs will be matching wits with twits.
This could be as much fun as the automated bathrooms at Washington DC airport when the power went out. You couldn't flush a toilet, wash your hands or get a paper towel. It gives more meaning to the quote; "The road to hell is paved with good intension's."