Big Board’s Plan to Open Earlier Gets Some Boos
The New York Stock Exchange said Wednesday that it will open the trading day half an hour earlier beginning Sept. 9, a decision that evoked immediate anguished cries of disapproval from some West Coast brokerages and brokers.
The Big Board said regular trading will begin at 9 a.m. Eastern time--6 a.m. California time--a half hour earlier than the exchange has opened since 1985. The move was approved by NYSE’s board of governors but must be reviewed by the Securities and Exchange Commission. The American Stock Exchange and the Pacific Stock Exchange, among others, said they will match the new hours.
NYSE officials said the move is part of their overall plan to increase trading hours to win back stock trades that were being executed overseas during the Big Board’s off hours.
The change means that West Coast brokers, already the early risers of the nation’s business community, will have to set their alarm clocks a half hour earlier to be at work in time for the 6 a.m. opening. But complaints weren’t only about losing sleep. Several of these early birds said they fear there will be few worms to catch at that hour.
Dale Carlson, vice president of corporate affairs for the Pacific exchange, said several West Coast firms opposed the earlier opening, because few clients would be up and ready to trade at 6 a.m. He said there is concern that institutional clients in particular won’t be reachable or eager to trade that early.
“We’re strongly opposed, and we’ve made our views known to the New York exchange,” said Seth Gersh, managing director for administration of Montgomery Securities, based in San Francisco. “It will increase our costs. It will increase our staffing requirements. And we don’t think it will increase our volume. It will simply stretch out the existing volume over a longer time frame.”
Gersh contended that the move also would reduce California investors’ clout in the market, because they would miss the earliest part of the trading day. “It’s a negative for every single investor on the West Coast,” he said. “It works against individuals on the West Coast being involved in the market.”
Not all West Coast firms agreed, however. Ronald W. Readmond, executive vice president of San Francisco-based Charles Schwab & Co., the nation’s largest discount brokerage, said the firm welcomes the change.
Schwab’s customers are almost all individual investors. The firm currently takes customer calls and orders 24 hours a day, and Readmond said the firm receives a steady stream of calls even in the pre-dawn hours.
And some of the big Wall Street firms lauded the move as a chance to capture additional business, including from European investors.
NYSE President Richard A. Grasso acknowledged that the decision wasn’t popular with the West Coast brokerage community. “I think on balance our decision was not without an enormous amount of concern and reflection on viewpoints we’d gotten from some of the West Coast firms,” he said.
Grasso, however, was cautious about predicting that the earlier opening would lead to a significant increase in trading volume. Although the exchange hopes the earlier trading over time will boost volume, “It’s very hard to say what if any the incremental volume will be,” Grasso said.
Two after-hours trading sessions inaugurated by the exchange just over two weeks ago so far have attracted scant interest from investors. Those sessions aren’t conducted on the exchange floor but by computer, and all trades are conducted at the 4 p.m. New York-time closing price. The earlier opening will be part of the regular daily session, with trades carried out on the exchange floor at fluctuating prices.
Meanwhile, individual California brokers and staff members had decidedly grumpy views about the earlier hours. James R. Kruger, compliance officer of Pacific Brokerage Services in Los Angeles, said, “Getting out of bed a half hour earlier at that time of the morning is going to be pretty brutal. I’m glad I don’t work in Maui,” which is three hours behind California time.
However, Jerry Dale, who does work in Maui as Prudential Securities branch manager, was stoical about the impending change. “We’re in some ways accustomed to inconvenience,” said Dale, who currently arrives at work at 3:30 a.m.
