Ringing at NYSE Has Become Belle of the Ball

By Thomas S. Mulligan

Dec. 26, 2003 12 AM PT

Times Staff Writer

NEW YORK —

When Chinese Premier Wen Jiabao made his first state visit to the United States this month, his mission was mainly economic, highlighting China’s emergence as a giant of international trade and its rapid embrace of capitalism.

How do you say that in a picture?

The answer for many newspapers the next morning was a shot of the premier, dressed like any other Wall Streeter in a conservative suit and tie, ringing the opening bell at the New York Stock Exchange.

For business titans, politicians, Hollywood celebrities and firefighter heroes of Sept. 11, landing the lead role in that little piece of daily theater has become an indelible mark of status. Notable bell ringers have included Nelson Mandela, Joe DiMaggio, rapper LL Cool J, Arnold Schwarzenegger and -- the subject of endless replays since her obstruction-of-justice indictment -- Martha Stewart.

“Corporate executives who are blase about most public events go all weak in the knees at the prospect of ringing that bell,” said Meyer “Sandy” Frucher, president of the Philadelphia Stock Exchange, the Big Board’s older but much smaller rival.

The opening- and closing-bell rituals, acted out on the narrow marble balcony overlooking the Big Board’s main trading floor, have become so familiar that it’s hard to grasp that the practice -- at least as a ceremony -- didn’t even exist before 1995.

Until then, an NYSE functionary would ring the trading bell purely as a matter of daily routine, with all the pomp of a custodian switching on the lights.

Today’s high-gloss pageant might as well be called Richard Grasso’s balcony scene.

Grasso’s eight-year reign as NYSE chairman and chief executive doubtless will be best remembered for the way it ended: with his Sept. 17 ouster by his board of directors amid a public outcry over his $187.5-million pay package.

The flap is leading to reforms intended partly to ensure that no future NYSE leader will wield the kind of power that Grasso amassed in a 36-year career at the Big Board.

But the bell ceremony may be another durable legacy of Grasso’s tenure -- although the razzle-dazzle has been decidedly toned down since his departure.

In contrast to Grasso, who gladly joined in the hoopla and was known to cancel overseas trips to attend important bell-ringing events, interim NYSE Chairman John S. Reed has appeared on the balcony only twice: for Premier Wen’s visit Dec. 8 and for the Dec. 17 initial public offering of stock in China Life Insurance Co., this year’s biggest IPO.

Incoming Chief Executive John A. Thain, president of Goldman Sachs Group Inc., is reputed to be even more retiring than Reed. Thain, however, “understands that his job is to restore confidence in the exchange, and I’m sure he’ll do whatever it takes to accomplish that,” Goldman spokesman Lucas van Praag said.

The bell ringing has taken on a life of its own and is unlikely to be phased out by a less promotionally minded management team, experts said. Despite the Big Board’s recent troubles, the ceremony remains a powerful tool for attracting companies to list their shares with the NYSE. Corporations use it to celebrate anniversaries or tout new products.

A bigger threat to the ritual’s future would be major changes to the NYSE’s live-auction trading system. Reformers, including some in Congress, have suggested pushing the Big Board toward an all-electronic format that would do away with the “crowd” of traders on the floor -- and thus remove the live audience for the opening bell.

By the NYSE’s account, the bell ringing is the most widely viewed daily news event on Earth, witnessed by as many as 110 million people on dozens of TV channels. Few viewers tune in specifically to see the bell rung, of course, but televised reports of stock market activity have become a staple of TV news coverage worldwide.

It took Grasso and his marketing chief, Sony Corp. veteran Robert Zito, to recognize that the advent of cable-TV business shows gave the Big Board a rare opportunity to give the NYSE “brand” huge exposure without an equally huge advertising budget.

The NYSE holds a trademark on the sound of its bell. A trademark application is pending for the phrase “The Opening Bell,” Zito said. A trademark wouldn’t prevent editorial uses of the phrase, he noted, but any commercial use would require the Big Board’s permission.

Broadcasters are under no obligation to show bell-ringing ceremonies, but they rarely miss them.

“We cover it as a news event,” David Friend, CNBC’s senior vice president for business news, said of the opening. He added that he couldn’t recall ever failing to carry it.

Lesa Ukman, founder of Chicago-based IEG Sponsorship Report, which mainly follows sports and entertainment marketing, said it was astonishing how much free exposure the NYSE had attracted.

“It’s become an icon,” she said of the opening. “You can’t get any better than that. Even calling it an opening ceremony puts it in the Olympics realm.”

New York advertising executive Erik Dochtermann estimated that the few seconds per day of broad TV exposure is worth about $2.5 million a year -- probably more, given that coverage by news organizations is considered more valuable than paid time.

It is clear that Grasso’s marketing coup has been a headache for rival exchanges.

The Nasdaq Stock Market, for example, built its landmark Market Site, a seven-story electronic billboard that wraps around a tower in Times Square, largely in response to the NYSE’s bell-ringing success.

Frucher of the Philadelphia exchange said his and other regional exchanges have followed suit by instituting opening ceremonies of their own.

“It was a brilliant stroke on Grasso’s part that turned out to be one of those levers of power that he was so adept at pulling,” Frucher said.

It’s a long way from the days when NYSE traders were called to order by an official who would walk the trading floor bashing a Chinese gong. The current brass bell -- or bells, really, since there are backups -- dates to 1903, when the exchange moved into its current headquarters.

The bell is operated by a button located on a dais on the balcony. A recent innovation is a plastic cover designed to prevent accidental ringings, such as one that occurred in the middle of a trading session years ago when someone traveling with then-Israeli Prime Minister Benjamin Netanyahu brushed against the button, causing traders’ heads to snap upward in alarm.

Grasso, thinking quickly, grabbed a microphone and said: “Ladies and gentlemen, Benjamin Netanyahu.”

Netanyahu, even quicker, acknowledged the surprised applause and then exhorted the traders to get back to work.

In one sense, Grasso became a victim of his marketing success. Many executives would insist on his presence at their bell ringings, arguing that appearing with a lesser official would somehow lessen the event’s prestige.

But one media bullet that Grasso unwittingly managed to dodge was the Oct. 19, 1999, ceremony for the initial public sale of shares of Martha Stewart Living Omnimedia Inc. Grasso wasn’t around that day, so then-NYSE President William R. Johnson, since retired, subbed for him on the podium with Stewart.

Historically, the bell has had a somewhat somber purpose.

One veteran floor trader vividly recalls a day in the 1980s when an NYSE member was drummed out of the exchange for misdeeds. In the middle of the trading day, a Big Board official rose to the podium and rang the bell, silencing the crowd of traders below.

The official then read off a proclamation naming the miscreant, enumerating his sins and pronouncing him forever banished from the exchange.

“It sent absolute chills through your spine,” the trader said, adding that he was a little sorry to see that tradition disappear.

“I tell you,” he said, “the fear of that ever happening to you kept you from stepping out of line.”

(BEGIN TEXT OF INFOBOX)

Bell ringers

A wide variety of athletes, celebrities and politicians have rung the bell that opens and closes daily trading at the New York Stock Exchange -- generally for some promotional purpose. Here’s a sampling of who has rung the bell and why during the last two years.

Name: Arnold Schwarzenegger

Occupation: Actor (now governor of California

Date: 2/6/02

Promotion: Movie ‘Collateral Damage’

Name: Dwayne ‘The Rock’ Johnson

Occupation: Pro wrestler-actor

Date: 8/26/02

Promotion: Voter campaign

Name: Michael Strahan

Occupation: Pro football player

Date: 1/13/03

Promotion: New soft drink