NYSE To Reopen Trading Floor On Limited Basis

The New York Stock Exchange and its owner Intercontinental Exchange Inc ICE are opening the NYSE trading floor back up to traders Tuesday for the first time in over two months.

The NYSE is taking substantial precautions to ensure it is complying with social distancing requirements and keeping traders safe.

What Happened

The NYSE shut its physical Wall Street trading floor down on March 23 after several floor traders tested positive for COVID-19. About 80 traders will be allowed back on the floor for the first time on Tuesday, roughly 25% of its former capacity.

Why It’s Important

NYSE trading continued smoothly on an electronic basis during the time the physical trading floor was shut down.

Yet Benzinga’s PreMarket Prep co-host Dennis Dick said back in March that a lack of floor brokers contributed to an increase in opening and closing volatility in the market due to opening and closing imbalances.

An order imbalance occurs when the amount of buy or sell orders in a particular stock far outweighs demand for the other side of the trade, making it difficult to match buyers and sellers. These imbalances often occur right at the market open or right before the close as investors take positions for the current or following day.

“These imbalances actually start coming out on the floor as early as 2 p.m. The public feed comes out at 3:50 p.m., but all the floor traders kind of know where they are, so they’ve already priced the market in,” Dick said.

Without floor brokers, Dick said the market has only 10 minutes to digest the closing balance data before the 4 p.m. close, opening the door for extreme volatility in the minutes leading up to the close.

What’s Next?

The remaining 75% of brokers not allowed on the floor, as well as the whole city of New York, will be keeping a close eye on how smoothly the NYSE reopening goes.

The NYSE is requiring every person who enters the building to take a temperature test and sign a document acknowledging the risks, pledging to adhere to social distancing rules and waiving their rights to legal action against the NYSE.

The NYSE is not allowing anyone who traveled via public transportation inside the building.

Shares of NYSE owner Intercontinental Exchanges were up 1.81% at $95.47 at the time of publication. 

Related Links:

Why Stock Exchange Floor Closings Could Be Creating End-Of-Day Volatility

NYSE Asks SEC To Ease Listing Requirements Due To Coronavirus-Caused Market Wipeout