The Nasdaq stock market’s trading floor, in the FMC tower at 29th and Walnut Streets in University City, closed Monday until further notice, as Mayor Jim Kenney and local officials across the U.S. warned large employers to shut, in an effort to slow the spread of coronavirus.
Stock options — which are bets on future stock prices — will continue to trade electronically, and up to a dozen staffers will oversee Nasdaq PHLX Options Market trades from a backup center on League Island Boulevard at the former Philadelphia Navy Yard in South Philly, said Joseph G. Christinat, a Nasdaq spokesman in New York.
But most of the 200 staffers who normally report to the center, and traders who work on one of the last “open outcry” floors in the United States, are staying home or trading from remote locations, as are staff on Wall Street and other world financial centers.
The move comes as the global securities markets continued to tumble on fears that coronavirus closings would lead to global recession. IHS Markit, an economic forecasting service with offices in Andover, Mass., and Philadelphia, projects that the U.S. economy will shrink by more than 5 percent in the second quarter, after years of steady growth since the 2008-2009 recession.
The Inquirer first reported the Navy Yard emergency automation was being prepared last week.
Nasdaq is best known for its all-electronic stock-trading venue. But it has also operated the options-trading floor since acquiring the Philadelphia Stock Exchange (PHLX) in 2006 and centering its futures and options trading and technology businesses in Philadelphia.
Nasdaq PHLX traces its roots to the nation’s first stock exchange, established in 1790 at Philadelphia’s London Coffee House, also known as a cargo and slave-trading market.
Nasdaq also said it plans to continue preparing initial public stock offerings (IPOs) and other services, though market-watchers have noted that fewer IPOs tend to launch when stock prices are falling.
Among the pending IPOs is the third attempted public offering in the past five years, by Philadelphia-based Lubert-Adler and other private investors of Albertsons, the $60 billion (yearly sales) supermarket group that includes Malvern-based Acme Markets.
While most stock trading has “moved upstairs” to well-wired firm trading rooms and desktop work stations, even from once-robust stock-trading floors such as the rival New York Stock Exchange, in recent years, many options traders still prefer the “open outcry” markets such as the Nasdaq floor, believing that it’s easier to arrive at continuous new prices -- or at least to profit from trades -- when other participants are in the room and can react quickly to client and proprietary orders, company and economic news.
Even as it has taken advantage of electronic trading technology and programmed trading, the securities trading industry has invested heavily in backup sites and alternate systems, especially since the 2001 terrorist attack on the New York financial district and the Hurricane Sandy floods that disrupted parts of Manhattan in 2012.
In 2001 the PHLX welcomed options traders from what was then the larger American Stock Exchange in New York at its basement trading floor on Market Street. Hundreds of bright-jacketed options, currency and stock traders from both markets formed loud crowds that bought and sold popular securities for more than a month, until the New York markets reopened for business.
Philadelphia is once again a backup for the securities business, but this time it is machines that are handling most of the trades.