Business

NYSE puts stock in computers if disaster strikes

The New York Stock Exchange is gearing up to stay open electronically if a Hurricane Sandy-style disaster keeps humans from running it.

The Big Board would rely entirely on computers if a disaster prevents traders from going to work on its famous downtown trading floor, under the plans by the exchange’s owner, NYSE EuroNext, according to the Wall Street Journal.

The proposal will have to be approved by the Securities and Exchange Commission.

As Sandy approached in October, exchange executives and brokers agreed to close markets to minimize the danger to employees.

Critics said that decision made it seem that the exchange was unprepared for the next disaster.

Under the proposed disaster plan, the NYSE’s all-electronic sister market, Arca, will handle all trades of Big Board-listed stocks and exchange-traded funds, sources said.

The change would make Arca the primary market, responsible for setting opening and closing prices for stocks.

If the plan is ever implemented in a disaster, it would be the first time the in the exchange’s 221-year history that it has been run entirely by computers.

Under the exchange’s current backup procedure, human traders are required to input buy and sell orders into the Arca system.

The plan mirrors the NYSE’s development of new technology that would let trading firms eliminate the 100-odd workers who now staff the trading floor every day.

Banks and brokerages have opposed eliminating the human traders.

Hurricane Sandy brought the first multi-day weather-related shutdown in the stock market in more than 120 years.

Exchanges in other cities have begun exploring similar disaster plans this year.

Among them are Direct Edge Holdings LLC and BATS Global Markets, which the Journal says are moving to set up backup sites in Chicago.

The Nasdaq maintains a disaster recovery site in Ashburn, Va., and can run its US markets from its European base in Stockholm.

With Post Wire Services