Wall Street Sees Opening by Monday
U.S. stock markets will remain closed for a third straight day today, as officials worried that communications snarled by Tuesday’s World Trade Center disaster would handicap trading on Wall Street.
The equity markets will resume trading “no later than Monday” and possibly as early as Friday, New York Stock Exchange Chairman Richard Grasso vowed in a news conference in midtown Manhattan Wednesday.
The Big Board and the Nasdaq Stock Market both are physically able to open and anxious to do so, their leaders said Wednesday, but the telecommunications connections that allow investors to send buy and sell orders to the markets still are being pieced together.
Federal regulators, exchange officials and executives of the top Wall Street securities firms decided collectively in meetings Wednesday that it would be a mistake to try to reopen before the infrastructure and market participants are fully prepared.
“We have to be certain that when we go, nothing brings us back down,” Grasso said.
Concerns that returning workers could interfere with rescue efforts at the disaster site also played a role in the decision, he said.
Trading in U.S. Treasury securities, halted early Tuesday after the extent of the terrorist attack on the World Trade Center became clear, will reopen at 8 a.m. EDT today but will close early, at about 2 p.m., officials said.
Some of the key trading firms will handle Treasury-bond transactions through overseas offices, Peter R. Fisher, undersecretary of the Treasury for domestic finance, said at the news conference in the Park Avenue headquarters of Bear Stearns Cos.
It was still unknown Wednesday when New York’s commodities-trading exchanges would reopen. Chicago commodity markets, however, planned to resume most trading today.
The break in NYSE trading is the longest since the outbreak of World War I, which idled the Big Board from July 31 to Nov. 28, 1914.
Telecommunications are the key stumbling block for the NYSE. Most, if not all, of the NYSE’s critical data-communications links pass through two switching centers in lower Manhattan operated by Verizon Communications, New York’s primary local phone company.
One of the facilities, which handles about 80% of the NYSE’s external data connections, is operating on diesel-generator power. It has only a day and a half worth of fuel left and trucking additional supplies through the rubble-strewn streets has been impossible, Verizon officials said. The other center, which handles the remaining 20% of the Big Board’s traffic, was badly damaged in the attack and out of service.
Verizon is trying to get more fuel to the generator and assessing the condition of underground lines between the equipment centers and the NYSE, Verizon’s vice chairman, Larry Babbio, said.
Beyond the phone problems, there is a major question of how to get thousands of market professionals back into a part of the city that remains filled with dust and debris and closed to nearly all traffic except rescue workers.
There also are scattered power outages throughout the Wall Street neighborhood; structural damage to several buildings, including the American Stock Exchange; and difficulty obtaining supplies of food and water for exchange workers.
Hardwick Simmons, chairman of Nasdaq, which owns the American Stock Exchange, said that if the Amex is unable to operate when trading resumes, there is a contingency plan to shift its options trading to exchanges in other cities. Amex stocks would be traded temporarily on the NYSE, Grasso said.
Record-keeping is not a major issue because all securities firms have backup data centers outside of Manhattan where they keep electronic copies of all trades. Many Wall Street firms also have “disaster sites” in Brooklyn or New Jersey where employees can conduct business on a limited basis.
Merrill Lynch & Co., the largest U.S. brokerage, won’t return to its World Financial Center offices today because the attack on the adjacent World Trade Center left its office without power and efficient access, the firm’s general counsel, Stephen Hammerman, told Reuters.
Merrill employees will be able to work at alternate sites, he said.
There may be no such alternatives for some smaller securities firms with offices in the World Trade Center.
When Nasdaq ran a check at noon Wednesday of electronic links between the market and the 32 broker-dealer member firms that had offices at the World Trade Center, “19 were unable to respond,” Nasdaq’s Simmons said.
“I’m very worried about them,” he said. “We haven’t heard from those firms in any fashion.”
Major mutual fund companies and discount brokerages said Wednesday they are ready to resume activity as soon as trading officially begins again on the NYSE and Nasdaq.
But some firms were taking unusual steps Wednesday as they sought to soothe customers’ concerns and prepare for the resumption of trading.
Some firms refused to take advance “market” orders--orders to buy or sell at whatever price is available when trading resumes. Others, such as Charles Schwab Corp., warned investors that potential volatility when trading opens could make such orders risky.
Schwab customer service representatives and the firm’s Web site are reminding investors that they can use “limit” orders, which are buy or sell orders to be executed only at a specified price or better, said spokesman Glen Mathison. If the market were to fall sharply when it reopens, for example, limit orders could protect sellers from getting prices far below their expectations.
He also said Schwab isn’t taking mutual fund orders online or through its automatic phone system, though customers can call a service representative to place fund orders.
Indeed, many fund companies are discouraging or not allowing online orders to be placed, steering customers to phone representatives instead, said John Collins, spokesman for the Investment Company Institute, the fund industry’s chief trade group.
“This allows [the companies] to give people the most updated information” about the market’s status and how trades would be handled when trading resumes, he said.
Strong Investments of Milwaukee, for instance, isn’t taking stock or mutual fund trades online while the market remains closed. “We need to explain to people that trades cannot be executed until the market reopens,” spokeswoman Jody Lowe said. “So it’s better to have personal contact” with a representative.
*
Staff writers Elizabeth Douglass and Josh Friedman in Los Angeles contributed to this report.
