Wall Street?s plans for Hurricane Sandy
Wall Street firms are running on skeleton staff today, as stock markets remain closed ahead of Hurricane Sandy?s approach and many traders in other markets as well as other financial professionals worked from home.
Here is a breakdown of what the major financial institutions said about carrying out business on Monday. Read more
Given all the emphasis on stability and investor confidence, operating the market that way didn?t seem to serve the public interest. Why do this? To prove we can? That didn?t seem to make a lot of sense
NEW YORK ? U.S. stock and options markets will be closed on Monday, and possibly Tuesday, as regulators, exchanges and brokers worry about the integrity of markets and the safety of employees in the face of Hurricane Sandy.
Market participants and regulators decided late on Sunday to shut the market, reversing a plan to keep electronic trading going on Monday. Bond markets will remain open, but will close at noon, a trade group said.
Pfizer Inc : rescheduled third quarter results and conference call to Nov. 1, before the bell, from Oct. 30.
Thomson Reuters Corp : rescheduled earnings announcement to Nov. 2 from Oct. 30.
Acorda Therapeutics Inc: rescheduled thirdquarter financial results and conference call to Oct. 31 from Oct. 30.
Systemax Inc: rescheduled third quarter earnings announcement to Nov. 1, after the market. The Company will host an earnings teleconference at 5 p.m. Eastern Time on that day.
MSC Industrial Direct Co Inc: rescheduled its fiscal fourthquarter results to Oct. 31 from Oct. 30.
Kaman Corp : Rescheduled third quarter results to Oct. 31, after the bell. A webcast and conference call will be held at 8:30 am Eastern Time on Nov. 1.
Entergy Corp : rescheduled third quarter earnings conference call to Nov. 5 from Oct. 30.
NRG Energy Inc : rescheduled third quarter earnings conference call to Nov. 2 from Oct. 31.
The decision to close stock and options markets came after regulators, exchanges, and dealers discussed the unknowns that would have been tested if the markets opened on Monday, three sources familiar with the situation said.
For example, NYSE Euronext?s New York Stock Exchange had initially planned to shut its physical trading floor, which would have meant operating as an all-electronic exchange for the first time.
?It was a judgment decision based on the safety of a lot of market participants, especially as the storm seems to be getting more severe,? said Larry Leibowitz, chief operating officer of NYSE Euronext, in a phone interview. ?Given all the emphasis on stability and investor confidence, operating the market that way didn?t seem to serve the public interest. Why do this? To prove we can? That didn?t seem to make a lot of sense.?
The decision to shut down the stock markets came after Wall Street had prepared to open for business on Monday with limited staffing after a mass transit shut-down in New York, booking hotel rooms for key employees and leaning on offices in other cities.
Wall Street banks, including Goldman Sachs Group Inc and Citigroup Inc, activated their emergency plans, which many firms put in place after the September 11, 2001, attacks. It was not immediately clear if those plans had also changed.
Some bank offices in lower Manhattan?s Financial District are in evacuation zones and most non-critical staff and employees who don?t rely on high-speed systems, including some investment bankers, were asked to work from home.
The last time the NYSE cut trading hours for weather was Jan. 8, 1996, when a blizzard dropped more than 20 inches on New York City. It last closed for a full day for weather when Hurricane Gloria hit on Sept. 27, 1985. Markets have not closed for four days in a row since the start of 2007 when, following a weekend and the New Year?s Day holiday on a Monday, they shut on Jan. 2 to observe a day of mourning for President Gerald Ford?s death the previous week.
?Everybody wants to get the markets open,? the NYSE?s Leibowitz said. ?We all know how important this is and we take the decision seriously. People expect the markets will be resilient and able to operate. The tenet is that the markets should be open if at all possible.?
?SUPER STORM?
The storm is expected to slam into the U.S. East Coast on Monday night, bringing torrential rain, high wind, severe flooding and power outages. The rare ?super storm? ? created by an Arctic jet stream wrapping itself around a tropical storm ? could be the biggest to hit the U.S. mainland, forecasters said.
The scramble started early as the threat of the storm forced the New York mass transit system to shut down on Sunday evening, leaving tens of thousands of employees stuck at home.
About 8.5 million commuters use the Metropolitan Transit Authority?s transit lines daily, meaning most Wall Street employees would be unable to get to work. New York City Mayor Michael Bloomberg also closed public schools and ordered an evacuation of 375,000 people in coastal areas, including downtown offices of banks such as Citigroup.
The major exchanges and most big trading firms have alternate trading facilities if downtown Manhattan is inaccessible, but the storm?s wide path may affect a number of sites in the New York metropolitan area. Authorities have warned of possible widespread power outages that could last for days.
Wall Street was spared the worst of Hurricane Irene in August last year. Officials had feared Hurricane Irene would flood lower Manhattan and cripple business in the world?s financial capital, but the flooding was minor and there were no major disruptions at the exchanges.
All of the U.S. exchanges, as well as major broker-dealers, and regulators were involved in the decision to close the markets, according to several executives at exchanges and financial firms.
The U.S. markets have seen three high-profile snafus this year, beginning with the failed IPO of BATS Global Markets, the No. 3 U.S. equities exchange, on its own exchange; Facebook Inc?s botched markets debut on Nasdaq?s exchange; and a software glitch that cost trading firm Knight Capital well over US$400 million, nearly forcing it into bankruptcy.
BOND MARKETS
The Securities Industry and Financial Markets Association said earlier on Sunday it is recommending an early close of noon EDT on Monday for the trading of U.S. dollar-denominated, fixed-income securities. It said its member firms should decide for themselves whether their fixed-income departments remain open for trading.
The foreign exchange market?s activity generally follows the fixed income markets.
The New York Federal Reserve has calls scheduled for early Monday morning with dealers to see what each dealer is doing to cope with the storm, and will modify its market activities accordingly.
In Washington, the Commerce Department said it would post its report on personal income and spending for September on its website at 8:30 a.m. as scheduled, even though the federal government was closed.
The Federal Reserve said it would postpone its regularly scheduled releases, including its weekly report on selected interest rates and daily commercial paper data. The Fed said it would release the data when federal offices in the Washington area reopened.
CME Group Inc said it will be closing its U.S. equity index futures and equity index options on futures markets on the trading floor and on CME Globex at 8:15 a.m., Central Time, on Monday. All other CME Group futures and options on futures markets will remain open.
IntercontinentalExchange Inc said trading in the ICE Futures Russell equity index futures and options will close early, at 9:15 a.m. Eastern Time on Monday. It said ICE Clear Credit will close at noon Eastern Time on Monday, with the U.S. fixed income markets. It said all other ICE markets and clearing houses will remain open and follow regular market hours.
WORK FROM HOME
Goldman, whose office in lower Manhattan is in one of the areas to be evacuated, told employees earlier on Sunday that it would open for business, with some staff working from offices in Greenwich, Connecticut, and in Princeton, New Jersey. It also plans to use teams in London and other locations around the world for support.
Citigroup, which has three buildings in the evacuation zone, said ?non-critical personnel should invoke their work-from-home strategies.?
JPMorgan Chase & Co said its buildings were still open Monday and the bank was planning to be fully operational, using resources in the United States, Europe and Asia.
For many investment bankers and private equity executives, working from home will make the most sense. Blackstone Group planned to close its office on Monday.
Hurricane Sandy also led to some events being canceled or postponed. Citigroup Prime Brokerage postponed a hedge fund event that had been scheduled for Tuesday.
With files from Bloomberg
? Thomson Reuters 2012
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