Stock Exchanges to Open Earlier Monday : New Age to Dawn for West Coast’s Brokers
John J. Connelly is going through a change in his daily routine, and he doesn’t like it.
Beginning next Monday, the broker will no longer climb aboard a bus for his daily 30-minute commute to the downtown Los Angeles office of Crowell Weedon & Co. Instead, to get to the office half an hour earlier, he will drive his own car, which is faster, and work through lunch so that he can leave by 2:30 p.m. to escape the rush-hour traffic.
“I have several clients who have more than one broker,” explains Connelly, a partner at Crowell Weedon. “If they call and I’m not here, I could very well lose some business.”
All this to be at his desk in time for the opening bells of the New York, American, Pacific and over-the-counter stock exchanges. Beginning Monday, they will open half an hour earlier--at 6:30 a.m. PDT--the first time change in the major exchanges since 1974.
West Coast Brokers Skeptical
The exchanges hope that an earlier opening will increase their business, particularly with European traders, and eventually will pave the way for 24-hour stock trading.
But while Connelly and other Southern California brokers are changing their schedules, few believe the extra half hour of trading will create much new business for the West Coast trading houses.
The West would have benefited more if the extra 30 minutes were tacked on to the end of the trading day. Many brokers say a later closing would have generated more trading activity in a broader spectrum of stocks, particularly from the Western part of the United States.
In contrast, the earlier opening affects a narrow band of stocks traded across the Atlantic Ocean and will mostly help Eastern brokerages and institutional traders.
“The interest of Manhattan came before California,” quips Mary Bianco, a broker at Yaeger Securities in Encino.
Donald E. Nickelson, president of the retail brokerage arm of New York-based Paine Webber, agrees. “There is no benefit to California that I can see,” he says. “It does not create a window to do more business” in the West. “We have to do it. The question is how to do it cost effectively.”
Higher Expenses
The large national brokerages will have more of their support staff in for the early opening than the smaller local brokerages.
Anthony P. George, vice president and resident manager of the Brentwood office of Los Angeles-based Wedbush, Noble, Cooke, says, “The only major problem is we have to bring in one wire operator a half hour earlier.”
Expenses are expected to be far greater for the various regional exchanges. The Pacific Stock Exchange’s 100 floor-trading employees in Los Angeles and San Francisco will all have to come in half an hour earlier.
Jim Gallagher, president of the Pacific exchange, says costs will go up, particularly for overtime and computer use.
“We haven’t figured out how much yet,” he said, adding that he expects to have a better reading by the end of October.
An official of another regional exchange, who asked not to be identified, said the exchange will incur about $300,000 a month in additional staff, telephone and other expenses.
Most traders say it will take quite some time to get any pay-back on the extra 30 minutes of trading.
Gallagher says that it is “absolutely unclear” how much net new business will result from the extra time.
“Some argue (that) now we’ll see the same volume spread over the additional time,” he says. “What is clear is that we don’t have a choice. If the NYSE extends its hours, we have to follow.”
Brokers are determining on their own whether to come in earlier. Wedbush’s 13 brokers at its Brentwood office are usually in by 6:45 a.m. or 7 a.m.
No Difference Seen
“We will have to convince the brokers little by little to come in a half hour earlier,” George says.
Bianco and George, who both plan to be at their desks at 6 a.m., say that most early morning trades from the West are actually placed by clients the day before. Thus, the 6:30 a.m.opening “won’t make a bit of difference” in stimulating additional trading, Bianco contends.
The time change also is not expected to have much impact on individual investors, because institutions account for most of the international trading.
Some brokers, however, aren’t taking any chances of missing some new, early bird customers.
“I’m changing my whole life,” says Connelly of his plans to arrive at the office earlier and leave earlier. “I used to work out downtown during my lunch hour to get a little exercise, but now I may have to withdraw from the club. I may find some doggone racket club nearby (the house), which will probably be cheaper, or set up a weight room in an extra bedroom.”
Brokers in Hawaii probably will be the most inconvenienced. George says Wedbush’s Honolulu office will be open at 3:30 a.m. Alaska-Hawaii time as of Monday. Even with its current 4 a.m. opening, most of the Hawaii office’s trading is compressed into three hours of the day, he said.
Changing the Big Board’s hours is not new. For nearly 100 years after the New York Stock Exchange’s opening in 1792, there were no fixed trading hours. In 1872, hours were set from Monday through Saturday. Weekday hours were extended and Saturday trading was eliminated in 1952. The closing was extended half an hour to 4 p.m. EDT in 1974.
The latest change by the New York Stock Exchange, announced July 10, was promptly matched by the American and Pacific exchanges and the National Assn. of Securities Dealers, which operates the over-the-counter market.
