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Jersey jousts for NYSE
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May 8, 1998: 6:40 p.m. ET
Big Board is the latest in a stream of modern exchanges scouting for new digs
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NEW YORK (CNNfn) - The bulls need more breathing room. But does that mean the New York Stock Exchange, stamping ground of Manhattan's financial wizards for many years, may actually decamp Wall Street to more spacious digs on the New Jersey waterfront?
"I suppose anything's possible," mused Wayne Wagner, president of the Plexus Group, a California-based consulting firm that helps big investors trim their trading costs.
Wagner was reacting to earlier reports that NYSE officials had been approached recently by Garden State economic developers offering sites across the Hudson as an alternative to its current cramped, collonaded quarters.
Yet after barely a pause, Wagner dismissed the notion of a Big Apple without a Big Board. "I don't think New York would ever let them go," he said, noting the potential cost in lost jobs and business.
Neither do most market observers. As a growing number of global stock exchanges either close trading floors or streamline operations while they move to fully computerized operations, several flagships of the financial world believe they need more space to accommodate record trading volumes and the new technologies driving them.
Among the realty hunters, The New York Mercantile Exchange is moving to a spiffy new $228 million home in Manhattan's Battery Park City from 4 World Trade Center, where it's been based for 20 years.
Dangling lots of carrots
The new Mercantile complex comes equipped with more than $40 million in high-tech communications gear to expedite trading. To prevent that exchange from migrating, city and state officials dangled $168 million in tax and other incentives.
Meanwhile, the National Association of Securities Dealers, which runs the tech-laden Nasdaq stock market, is said to be considering a move to New York from Washington.
Last month, NASD approved a proposed link-up between the two exchanges that would marry Amex's historical cachet with Nasdaq's cutting-edge technology to create what some are calling a "market of markets".
Under the merger plan, which now faces a vote by Amex members, the American Stock Exchange will continue to operate as a specialist-based market with its own members and listed companies. Whether that will require more space is yet to be determined, though Dan Noonan, an Amex spokesman, did not rule out such an option.
Then there's NYSE, by far the world's largest exchange with $13 trillion in capitalization and more than 3,000 listings.
Wall Street 'no longer viable'
Richard Grasso, the chairman of The New York Stock Exchange, was reported as saying that remaining on Wall Street is "no longer viable." Grasso was quoted as saying the New Jersey overture -- which apparently included an offer to build a $1 billion trading floor in Jersey City -- had "some very, very significant incentives."
"It was the (New Jersey) governor's suggestion to open a dialogue about a package of economic incentives, and they made a very compelling case," Grasso said in published reports.
The Big Board's scramble for more space has come down to two main choices after two previous plans to expand in a building adjacent to its current site foundered on opposition from local landmark preservationists.
Instead, Grasso is apparently now leaning toward erecting a pair of trading floors in a Battery Park City complex with 1.1 million to 1.3 million square feet.
The Battery Park plan's costs are estimated at $1 billion to $1.25 billion. Robert Zito, NYSE's senior vice president for communications, said the exchange would prefer to stay in New York, where it enjoys a symbiotic relationship with the financial district it anchors.
"We've been here for 206 years, we'd like to stay in New York," Zito said.
Stay or go, NYSE is being thrust headlong into the new trading age. Today, its traders carry sleek hand-held computers that enable them to instantly relay deals from a teeming trading floor. The devices, used by many electronic exchanges, have expedited the trading process to the point where stock volumes routinely rocket past the 600 million mark.
Quaint mementos of a bygone era
But better technology has allowed exchanges to handle the exponential surge in volume more efficiently, turning many traditional trading floors into quaint mementos of a bygone era.
The Toronto Stock Exchange shut down its floor trading last May. Germany has merged some of its exchanges in an effort to streamline costs. The impetus behind the Amex and Nasdaq merger, similarly, is to pare costs.
"The big question here is, are trading floors obsolete?" asked Wagner.
For NYSE, at least, the answer is still a resolute "no." But Wagner suggested that no exchange, no matter how mighty, can afford to ignore the problem.
"Operating costs of an exchange is a very serious issue," he said. "We have wonderful volumes now and there's a lot of flow of money into the exchanges, but if we go into a decline and market values go down, we are going to see them get pinched."
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