NYSE Brokers Dwindle to 800

Just before the New York Stock Exchange went public in 2005, 1,366 brokers held seats, and now that’s down to only about 800, The New York Times reports. And in the next several weeks, the NYSE plans to close two trading rooms, reducing the trading floor to half the size its was at its peak in the 1990s.

Some even believe the NYSE is being reduced to a backdrop for financial TV shows, with most trades moving to electronic trading networks. In fact, as recently as 2004, 80% of trades for the stocks listed on the exchange took place on the floor, and today that’s less than 50%. Specialists now take part in only one out of every 30 trades, down from one out of seven five years ago.

“It is certainly not as crowded as it used to be,” said Doreen Mogavero, a floor broker.

“The floor as we knew it is dead,” said James Angel, an associate professor of finance at Georgetown University. “The old days when Billy would trade with Vinny and swap information about orders so that they could get a better price for their customer are gone.”

As an indication of the demise of the NYSE, one of the most prominent specialist firms at the exchange, LaBranche, reported a loss of $370 million in the second quarter.

“Until the specialists and the brokers can make a satisfactory return on their investment on the floor, everything is in question,” said Patrick Healy, chief executive officer of Issuer Advisory Group. “Whether the floor can survive is a 50-50 proposition. The answer is, we’ll know soon.”

But executives at the 104-year-old exchange maintain its future is certain. “We intend to have the floor as part of our market model as far as we can see out into the future,” said Duncan Niederauer, president of NYSE Euronext, the parent company of the NYSE. “There are certain things that computers can’t do.” Niederauer also said that he doesn’t expect the NYSE to reduce the size of its floor any more.