The New York Stock Exchange’s fabled floor traders, fearing steeper job losses in their already diminished ranks, are an endangered species.
With the heyday of the human floor trader now ancient history, many observers say the bell now tolls for the few traders remaining. On a typical day, some 250 floor traders mill about — a far cry from the thousands who once traded securities on the venerable floor.
And those who are left claim they are plagued by the heavy hand of regulatory compliance and by competition from advanced technology and high-frequency trading.
At the center of the latest storm, say traders, is fallout from NYSE enforcement of a rule that regulates the opening and closing of the regular trading day, a key money-maker for the exchange, and for traders applying their value-added skills.
According to official data, the exchange has slapped fines on an increasing number of NYSE floor brokerages for violating the rule, which helps establish credit limits for customer transactions.
“They really have been harassing some of these floor traders because they don’t seem to want them any longer,” the head of one brokerage firm, which employs a clutch of floor traders, told The Post, referring to the NYSE’s regulatory unit. “They are doing a witch hunt,” he added, “and making unreasonable demands for records and other stuff.”
This Wall Street veteran was explaining how the Big Board itself appears to have ratcheted up regulatory enforcement — pushing more firms into a frenzy of form-filling in response to requests for trade-related information, while slapping firms with more fines.
Defenders say the NYSE’s regulatory arm is merely fulfilling its mandate. Critics scoff it is being overzealous to the point where more trading firms are packing up. Over a dozen firms or so have quit the floor, or merged with larger firms, since the start of 2018, leaving about 35 in business, according to official data. That’s down from hundreds in the 1990s.
The losses come as automated trading continues to challenge the livelihoods of human floor traders.
“Floor traders on the NYSE have been under siege from the forces of ‘creative destruction’ for close to two decades now,” said Robert Reilly, a former institutional sales trader who recalled sending orders to NYSE floor brokers. “Their role and purpose has been steadily eroded as technology has increasingly automated their daily duties,” added Reilly, today the chief investment officer at Sandy Cove Advisors.
The NYSE, part of the Intercontinental Exchange, declined to comment for this story.