Image: Traders on the floor of the New York Stock Exchange
Keith Bedford  /  Reuters file
A once teeming exchange floor is now merely busy as big Wall Street firms cut the number of staff that man stock trading posts. The number of people on the floor has dropped to about 2,100 from 3,000 in a matter of months. Even the wooden trading floor is missing the heaps of paper once strewn across it during the course of a day.
updated 2/20/2007 2:01:23 PM ET 2007-02-20T19:01:23

Michael Rutigliano used to feel like Mickey Mantle each time he stepped on the New York Stock Exchange floor.

The longtime NYSE broker said it "felt like walking on to the field of the Yankee Stadium of the business world, complete with lights, referees, uniforms, hand signals, and scoreboards. There's a palpable energy, a sense you entered the premier business arena in the world."

That arena is in the midst of radical change. The NYSE's iconic trading floor, the emblem of capitalism at work, is hurtling toward an uncharted future as the exchange embraces an electronic age.

NYSE Group Inc., the parent company that operates the exchange, is in the midst of the biggest changes in its 214-year history. The open outcry system where frenzied traders scream "buy" and "sell" has now been replaced by one where transactions are quietly processed by computers.

This new era leaves the Big Board better equipped to compete with the Nasdaq Stock Market Inc. and other electronic trading systems. For traders, the leap into the digital age drastically curtails the need for human interaction and puts all of their jobs on the line.

A once teeming exchange floor is now merely busy as big Wall Street firms cut the number of staff that man stock trading posts. The number of people on the floor has dropped to about 2,100 from 3,000 in a matter of months. Even the wooden trading floor is missing the heaps of paper once strewn across it during the course of a day.

Although layoffs have swept the floor, the need for brokers and other stock specialists is not lost on NYSE Group Inc. Chief Executive John Thain. He maintains there will always be a trading floor, in what the exchange calls a hybrid market that infuses the speed of electronic trading with the experience of seasoned professionals.

"There will continue to be a need for a person involved," Thain said. "I believe the specialist will continue to add value. They are very viable, very competent, and they add value to their customers."

Traders have been clocking into work inside the NYSE's marble columned building for more than a century. Beyond different hours and the introduction of handheld devices used to execute trades, the actual process hasn't changed much the entire time.

They change into colorful mesh-backed jackets, some adorned with buttons of their firm or favorite sports teams, and set to work when the opening bell rings at 9:30 a.m. Orders are filled, trades executed as floor brokers push through stock transactions that now total about 3 billion a day.

Some on the floor follow their fathers and grandfathers into the profession, making stock dealing a family business. Others rise through the ranks from a simple clerk to a broker making more than $1 million a year. All belong to a fabled fraternity.

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By 4 p.m., the steady hum comes to a dead stop with the sound of the closing bell. Except these days there are rounds of applause as some depart the building on the corner of Wall Street and Broad Street for the final time.

For decades, they've gone to Suspender's of Wall Street to celebrate big gains and drown their sorrows when the markets plunge. Billy Ahearn, the retired New York City firefighter who owns the bar, said these days it's not uncommon for his regulars to come in clutching pink slips.

On Christmas Eve, the bar was filled with a few dozen patrons who lost their jobs on the NYSE floor. Many confided in Ahearn that they never saw the job cuts coming, and would get out of the business altogether.

It's hurt his business, still recovering from the Sept. 11 attacks.

"It is tough to complain about business when people's lives have been affected," he said. "This directly impacts our pockets. Machines and computers don't eat and drink."

The absence of longtime floor brokers has not gone unnoticed. Traders and others that work the trading floor think of themselves as a community.

"It pains me," said Rutigliano, president of the Organization of Independent Floor Brokers, a group that represents about 400 or so traders. "These changes have resulted in many good and talented people leaving, and unfortunately, I don't think we've seen the end of it."

Rutigliano, who is also director of floor trading for W.J. Bonfanti Inc., explains traders will weather the changes and survive. He can't imagine doing any other job — even that of a Hollywood actor, which Rutigliano knows a thing or two about.

He was featured in the movie "Wall Street," playing the trader working on behalf of actor Michael Douglas' character Gordon Gekko. When the movie runs on cable during a weekend, Rutigliano said he gets mercilessly teased at work.

The footage of a crowded and boisterous trading floor in that movie seems almost anachronistic compared to the current atmosphere. The list of brokerages that trade the stocks, and specialist firms that match buyers and sellers, are dwindling.

Earlier this year, Van der Moolen Holdings NV — a Dutch specialist firm whose U.S. unit helps match buyers and sellers at the NYSE — said it will slash about 30 percent of its work force. Similar moves have been made by LaBranche & Co. and Bear Wagner, and specialist units operated by banks like Goldman Sachs Group Inc. and Bank of America Corp.

Traders from major firms from Merrill Lynch & Co. to Lehman Brothers Holdings Inc. have removed employees from the floor. The NYSE itself is also cutting about 500 jobs.

Behind the changes is the Big Board's competitive need to provide speedier trades, an important step as it evolves into a global exchange with the acquisition of Paris-based Euronext NV and a stake in India's National Stock Exchange. The NYSE also just signed a broad alliance with the Tokyo Stock Exchange that could set both up for a future combination.

Automation is the only way for the NYSE to handle far more trades and remain competitive. It means the specialist firms previously logjammed with transactions can now more easily manage thousands of trades each minute.

Transactions pumped out in a millisecond allow specialists to cut the number of computer keystrokes to 20 million from 45 million each day. The average time to complete a trade has fallen sharply — to about three-tenths of a second from nine seconds before — and the exchange plans to cut this by a further 90 percent.

Around the globe, major exchanges are for the most part electronic institutions. The London Stock Exchange, currently the target of a hostile takeover by the Nasdaq, has traded electronically since what the British press called "The Big Bang" in 1986. Euronext, the pan-European exchange with subsidiaries in Belgium, France, the Netherlands, Portugal and a derivatives market in the U.K., trades electronically.

And, in the U.S., rival Nasdaq has been the largest screen-based stock market since it launched in 1971. The exchange said its system is more open and transparent, where all trades are equal and without the influence of brokers that might have a bias.

Still, those on the floor contend you cannot replace human intuition. A computer cannot trade on gut instinct, and Wall Street still demands the kind of savvy that traders and specialists bring to the table.

"Nobody knows these stocks better than me," said Edward Sweeney, a vice president for Bear Wagner that manages stocks such as Abbot Laboratories. "The hybrid system allows us to stand back and make better trades. But, when there's a volume spike or an important trade, there is still plenty of opportunity for us to make a living."

Under the new operation, stocks will trade electronically most of the time, but can revert to a floor trader at the request of a client or during periods of volatility.

Louis Pastina, an executive vice president at the NYSE in charge of the hybrid rollout, said customers now have more choices in trading NYSE-listed securities. They can decide that important trades that demand attention be completed by a trader, instead of being processed anonymously through a computer.

"You might buy a book on eBay, but you might not want to buy a brand new Mercedes Benz that way," he said. "The same thing applies here."

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