The New York Stock Exchange is on life support as profits get creamed by plummeting trading volume — exactly two years after the electronic Flash Crash sent the storied mart into a near-death spiral.
Trading executives fear the clock is finally ticking for the city’s most famous financial landmark — the workplace for 1,200 floor traders who’ve weathered a brutal decade-long decimation in their ranks.
“I’m 100 percent glad I am no longer on the floor,” retired NYSE broker Paul Olsen told The Post. “I don’t know what’s going to happen next. I think the floor’s time is really limited.”
“It is amazing, just amazing,” added Olsen, recalling his recent nostalgic return visit to the floor. “All these brokers for the big firms are still running around like crazy before the opening, and then they sit down all day — they don’t do anything.”
And it’s only getting worse.
NYSE said this week total US cash trading averaged 1.8 billion shares daily, a sharp 23 percent decline from last year and 16 percent from the previous quarter.
The NYSE’s parent is global exchange operator NYSE Euronext. It was humbled by European regulators in February when they blocked it from merging with Germany’s Deutsche Boerse. NYSE Euronext says its first-quarter profits plunged 44 percent.
The Big Board, meanwhile, seems unable to shake off the lingering fallout from the Flash Crash of May 6, 2010. On that unforgettable day in trading history, the Dow Jones fell a gut-wrenching 1,000 points, or 9 percent, within minutes, only to recover ground just as quickly.
Nothing has since been the same behind the ancient marble facade of the NYSE at 8 Broad St. Critics point accusing fingers at high-frequency traders for much of the exchange’s troubles today. These high-speed professionals account for a vast pool of stock trading on the NYSE.
It’s supposedly as much as 70 percent in some individual stocks. But many of these superfast traders — under regulatory and public scrutiny for their role in the Flash Crash and trading strategies generally — have scaled back as retail investors withdraw from equity investing.
That has further dragged down NYSE stock trading volume. There’s also not enough market “volatility” to bring the fast traders back into the market. In excess of $250 billion in long-term equity funds have left the markets since May 6, 2010, according to Themis Trading. That’s despite an uptick in the economy and a stock market that has almost doubled since its 2009 lows. “It isn’t that these investors don’t have confidence in the economy,” according to Sal Armuk, a partner at Themis, a big skeptic of high-frequency traders. “They don’t have confidence in our markets.”
But Duncan Niederauer, chief executive of NYSE Euronext, said some high-frequency players may be exiting the more regulated US markets for more welcoming marketplaces.
In its heyday, the NYSE dominated trading in its own stocks, with a nearly 90 percent market share in 1980. Today, its market share is around 25 percent. At the pinnacle of its success, the floor employed 3,000 traders. Nearly 2,000 of them are now gone.