* New York mass transit system closes at 7 p.m. EDT Sunday
* NYSE, Nasdaq, other exchanges to open for trade Monday
* NYSE, NYMEX floor trading operations suspended
* Flooding, power outages are top risks as hurricane nears
By John McCrank and Caroline Humer
NEW YORK, Oct 28 Wall Street firms prepared to
open for business on Monday at least with skeletal staff,
booking hotel rooms for key employees and leaning on offices in
other cities as Hurricane Sandy forced the New York mass transit
system to shut down, leaving tens of thousands of employees
stuck at home.
Executives, traders and bankers said they expected a light
trading day on Monday - and depending on the impact of the
storm, possibly through Tuesday - as some offices in lower
Manhattan's Financial District are in an evacuation zone and
most non-critical staff were asked to work from home.
Major U.S. stock exchanges, including NYSE Euronext,
Nasdaq OMX Group and Direct Edge, and banks such as
Goldman Sachs Group Inc, Citigroup Inc and JPMorgan
Chase & Co were all putting in place contingency plans
to open for business on Monday, but that involved some firms
scaling back operations.
NYSE said on Sunday afternoon that it will close its
physical trading floor operations for the first time in nearly
three decades due to a weather-related emergency, but would move
trading of NYSE-listed stocks to its fully electronic exchange.
This is also the first time NYSE has ever gone fully electronic.
Meanwhile, the exchange will evaluate on "a day-to-day
basis" as to when it will reopen the floor, said Larry
Leibowitz, NYSE's chief operating officer, but if forecasts are
correct, the weather may worsen on Tuesday.
The decision to close the Big Board's trading floor came
after a series of discussions with floor brokers, employees,
city officials and others. Leibowitz, who lives in lower
Manhattan, but not in the evacuation zone, said he would be
showing up for work on Monday.
"I will be there ... I will probably be singing a solo on
the trading floor," he said.
Hurricane Sandy is expected to slam into the U.S. East Coast
on Monday night, bringing torrential rains, high winds, 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 on Wall Street started early as New York
Governor Andrew Cuomo announced the subway, bus and rail system
in the city begin to close at 7 p.m. EDT on Sunday (2300 GMT).
About 8.5 million commuters utilize 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 Street's contingency plans face several unknowns. 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.
CME Group Inc said it was suspending floor trade on
Monday at NYMEX headquarters, the world's biggest oil and energy
futures and options market. But electronic trade at all of CME
will open at their regularly scheduled time at Globex and
ClearPort, CME's online electronic platforms.
The Securities Industry and Financial Markets Association
said 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.
One bond trader at a large Wall Street firm said the New
York-based banks would route orders through their Midwest and
West Coast offices. West Coast employees were planning to get up
early, he said, while colleagues in Europe were expecting a long
working day on Monday.
Volumes were, however, expected to be lower and orders may
be harder to fill, the trader added.
Ken Polcari, managing director for ICAP Equities, said early
on Sunday: "The word going around the floor on Friday was people
should expect this to happen. In the event the exchange does not
open, they will trade electronically though."
"If that happened, it's probably going to be very muted
volume," he added.
WORK FROM HOME
Goldman, whose office in lower Manhattan is in one of the
areas to be evacuated, told employees 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 additional support.
Citigroup has its trading floor near the Hudson River in the
Tribeca neighborhood in Manhattan, putting it in a flood zone.
The bank is operating from a backup trading floor in New Jersey
and will shuttle critical employees there as necessary. It said
"non-critical personnel should invoke their work-from-home
Credit Suisse Group is situated by Madison Square
Park in New York, outside of the city's evacuation zones for
hurricanes. The Swiss bank planned to open its trading floor as
usual on Monday, staffed with employees that live nearby and key
personnel that can access trading systems remotely.
A JPMorgan spokeswoman said many of the bank's traders lived
in Manhattan and will be in the office on Monday. The bank
expects to be fully operational, using backup trading and
technology from Europe or Asia as needed, she said.
Wells Fargo & Co, which has about 1,170 locations in
Sandy's path, had already closed some locations by Sunday
afternoon. Executives in various departments were holding
conference calls on Sunday to discuss preparations, a bank
The executive also said the exchanges' plan to stay open on
Monday had complicated banks' preparations.
"With MTA shut down, how are people supposed to get around?"
the executive asked.
PLAN TO STAY OPEN
The NYSE has not suffered a weather-related late opening
since 1996, having opened on time in extreme circumstances in
the past, including Hurricane Irene last year. It last suspended
physical trading floor operations on Sept. 27, 1985 due to
Hurricane Gloria, during which all markets were closed.
The Big Board is located in Zone C, an area whose likelihood
of evacuation is relatively low, according to the New York
Office of Emergency Management.
The NYSE has arranged accommodations for essential staff
near its lower-Manhattan headquarters, while other employees
have been encouraged to work from home or alternate locations,
said a person familiar with the situation.
Being on site is more important for traders that rely on
fast network connections and real-time market information, than
bankers such as deal advisers and private equity firm
Blackstone Group, for example, 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.