Keeping the stock market open all day Friday, despite a massive power outage that left many traders without Internet or cell-phone access, was a mistake that put some Wall Street professionals at a disadvantage, a few critics said Monday.
But while some players complained, the majority cheered the
New York Stock Exchange's
decision, saying that market continuity trumps any other consideration. The fact that the exchange opened as usual helps to build trust around the world, showing that the U.S. financial system can easily withstand large shocks, they argue.
As the lights went out and offices were evacuated across the Northeast Seaboard late Thursday, many traders were left stranded without access to a computer, a television or a working cell phone. That made it all but impossible to get the information necessary to make key trading decisions.
reported earnings, I was never able to read the press release, listen to the
conference call or even see a headline," said Cody Willard, partner in a small buy-side firm and contributor to
. "Dell is a big market mover and all day Friday I had no idea -- other than listening to a 30-second snippet on the radio -- what Dell had done."
Willard said he wasn't able to trade options that would expire at the end of the day Friday either. Friday was a quadruple-witching day, meaning that options on individual stocks, stock indexes, futures and single stock futures all expired.
"Frankly, I can't believe that the powers that be opened the markets Friday," Willard said. "We're supposed to be proud of our fair and open markets, but by being open Friday, they were anything but fair."
Seth Tobias, hedge fund manager at Circle T Partners in New York, said he was very disappointed with the NYSE's decision not to curtail trading. Had the markets not opened at all, it could have "really screwed things up" because of option expiration, but Tobias said there was no reason the exchange couldn't have cut the session short.
"I think the prudent thing to have done would have been to delay the opening or curtail trading," he said. "Ninety percent of my operation was shut down on Friday. The firms that had backup generators or had their power restored were able to fully function and those that weren't were at a disadvantage."
If the exchange had delayed opening by one or two hours, Tobias said, it would have given many smaller traders an opportunity to relocate to other offices. "I was really angry with the New York Stock Exchange; in fact I was appalled."
The NYSE, which has said the complaints "don't merit a response," has always prided itself on being open under some of the most difficult circumstances, and quickly moved to assure investors late Thursday that the market would be open for business as usual the following day. The last time the NYSE shut its doors unexpectedly was in the aftermath of Sept 11, 2001, when it closed for four days.
Other exchanges had delayed openings and/or closed early Friday. The Bond Market Association advised an early close at 2 p.m. EDT for the bond markets, citing transportation problems for many employees in New York. And crude-oil futures at the New York Mercantile Exchange traded for about two hours instead of the usual 4 1/2 hours.
"Friday was an option expiration day so I think
NYSE Chairman Richard Grasso was under certain pressure," to keep the market open, said Bob Basel, head trader at Salomon Smith Barney. "If a lot of traders weren't able to get to their building and couldn't react, that's unfair. But my question is how many people were disadvantaged?"
Basel said his firm had backup generators in the building and was able to work Friday. Many of the large Wall Street brokers, including J.P. Morgan, Goldman Sachs, and Credit Suisse First Boston said their trading floors were operational by Friday morning. Indeed, Con Edison restored power to the Wall Street area at around 5:40 a.m. EDT Friday.
Peter Cardillo, chief strategist at Global Partners Securities, was among those who had access to information early on and believes that opening the markets "sent a loud message that unless there's some major catastrophe, the financial markets won't be affected."
"By 8:20 a.m. in the morning I was up and running, everything was normal except for the air conditioning," he said. Cardillo also noted that the markets actually rose Friday and that while volume was much lighter than usual, it would have been light anyway, given the time of year.
Still, some small players remain unhappy. "My performance suffered as a function of me not being able to be here on Friday when the market was open," Willard said. "That in a nutshell is wrong."