Getting into the New York Stock Exchange is not an easy task. This is what I couldn’t help but think as I peeled off my jacket and placed my handbag on a conveyor belt, before being motioned through a body scanner by an imposing looking but surprisingly affable security guard. It echoed the same tedious procedure I’d had to go through to gain entry to America in the first place, which in my mind implied that the two were of tantamount importance.
In the past I would have been required to send along my passport number in advance of a visit, but now all that’s needed is a willing employee to sponsor one’s entry. The reception room gleamed with marble and wall to wall mirrors. I found myself blinking repeatedly at the incredible whiteness, which probably accounts for the utterly unflattering photo that was taken of me and affixed to a temporary yellow day pass.
The Stock Exchange has come a long ways from its humble origins. In 1792, 24 brokers signed an agreement to trade a mere five securities under a buttonwood tree on Wall Street. For all intents and purposes it was their very own Bodhi tree, for the building buzzes with a reverence, bordering on religiosity. The board rooms are, in a word, palatial – high ceilings, gold-gilded cornices, even a stained glass roof. A mahogany table stretched lengthways down one of the rooms, around which three of four clusters of navy suit-clad brokers orbited, speaking in hushed tones as they waited for a meeting to begin.
The floor is sound-tracked by incessant, constant bleeping, a do-da-leep which rings through every time a trade is processed at a trading desk. $2.5 trillion worth of transactions are processed every day, equivalent to an average 800 billion shares. For a point of reference, that is the GDP of the United Kingdom.
The actual trade value is a little less impressive – $169 billion, for it is often the same sums money that are being volleyed back and forth in series of trades. While the floor’s trading capacity has increased in tandem with the move towards digitised transactions, I still couldn’t imagine what it must have been like before the trading technology came to the fore.
“The Stock Exchange has come a long ways from its humble origins. In 1792, 24 brokers signed an agreement to trade a mere five securities under a buttonwood tree on Wall Street. For all intents and purposes it was their very own Bodhi tree, for the building buzzes with a reverence, bordering on religiosity. The board rooms are, in a word, palatial – high ceilings, gold-gilded cornices, even a stained glass roof.”
In former years, by 3pm the stock exchange floor would have been littered – absolutely littered – with paper. Securities were traded hand to hand, with young and presumably stressed out employees called runners darting around to process these trades. Though this practice may sound archaic, things were done this way as recently as 2006, when only 14% of trades were completed online. The application of digital trading systems caused this number to shoot up 80%, leading to (among other things) a cleaner floor. I did spy the odd empty carton of aspirin and even a pack of cigarettes on the ground; it seems that the traders were enjoying varying degrees of success that day.
The exchange floor was not near as frenetic as I had been hoping for. Martin Scorsese’s “The Wolf of Wall Street” has drawn attention to the financial sector of late and painted society’s view of it with a touch of glamour. It was portrayed as a never-ending thrill ride of high stakes, obscene wealth, emotional zeniths and nadirs, and (of course) cocaine.
With this expectation in mind, it was a tame place. Day trading can be done from home, and a considerable portion of trades are instigated by foreign clients; there isn’t the same need to have the place bursting with people as there once was. I had in the past heard rumours of businesspeople loosening their ties and flat out punching each other with frustration at points during the trading day, so much so that the Stock Exchange had to introduce a system of fines, but no one I spoke to had ever witnessed such an event.
They were aware of the fines however, and none saw the possibility of anger manifesting in fisticuffs as unreasonable. The closest thing I saw to a fight that day was a tense interaction between traders. With a Bluetooth headset clipped to his ear, a man came out of the woodwork and approached another trader who was watching a screen and anxiously awaiting the announcement of the value of Verizon shares.
“Kevin” the conversation began, the trader’s voice peppered with irritation “Did you put through those fifteen million shares?” Kevin clenched and unclenched his fingers, not quite knowing what to do with his hands. “I did, yes, they may not have been transferred yet but I got them through.” “They went through before four? Before the market closed? Because my client is asking about them.” Kevin agreed to look in the matter and the trader walked away as brusquely as he had entered.
The room may have been sparsely populated, but there was still a dizzying buzz of activity that I couldn’t quite acclimatise to. There must have been at least twenty giant computer screens, all covered with neon numbers which fluctuated constantly. Company logos whizzed by with the relevant NASDAQ figures beneath them – more of them were familiar to me than I’d expected, for tech startups and social media companies dominate the market these days.
I was nearly scalped by a passing news camera propped on a reporter’s shoulder, who barrelled past me as he went to approach the CNBC news desk that has become a permanent installation on the floor. The hub was running a news report on the events of the Exchange, with coiffed female news anchors teetering by in platform heels and fitted dresses as they regularly switched shifts. There were cell phones, headphones, tablets, computers and Tungsten lights, and I could only imagine the stark silence and darkness that would have enveloped the place in the event of a power cut.
I think I’d expected the floor to be more chaotic for a number of reasons, the first being that quintessential stereotype of the Stock Exchange in the throes of panic after the 1929 Wall Street Crash. The place, I have heard, was thrown into disaster, a hotbed of human despair; one retired Solomon Brothers securities trader recounted to me, with a laugh, a classic joke about how the perimeter of the Stock Exchange building was a no-go after the crash, lest you be crushed by recently bankrupt financiers throwing themselves off the roof.
It had been the financial equivalent of an apocalypse, with trading slips raining down as the faith so many had placed in the stocks was thrown back in their faces and the market revealed her true precarious nature. Furthermore, the people on the stock exchange floor – to state the obvious – are the people most heavily invested in how the market fares. Not just from a professional perspective either; the traders I spoke to talked about plugging portions of their salaries into stock investment plans to produce the capital for their children’s college tuition.
Granted these people are very well versed in how the market works, so have most likely investigated these schemes and insured that they are only low and medium risk securities, but nevertheless I was perturbed by that element of risk. A market crash would send one’s savings into the ether, in an instant, and it’s not unheard of that even sure-fire securities suddenly bottom out.
The devastation of a modern market crash is an invisible one, summed up by dipping graphs and ticking numbers on a screen. There is no tangible destruction, no fire, explosion or wailing of sirens, but people’s entire lives can go up in smoke. This is how I envision the 2008 crash being received – though not the greatest crash in Wall Street history, it was the quickest, with the markets declining 50% over 17 months as opposed to the 80% dip the markets took between 1929 and 1932. Institutions crumbled; the companies that people thought were reliable investments fell apart before their eyes, calling into question whether it’s truly possible to know anything about how the markets will go.
If that didn’t convince you of the unpredictability of the financial world, consider 2010’s May 6th “Flash Crash”, in which the markets plummeted 9% in the space of a day, only to bounce back to pretty close to their original levels within hours. The debt crisis in Greece had negatively impacted the market – it was down 300 points on the Dow Jones Industrial Average, one of many closely watched stock market indexes. Suddenly, the market went down another 600 points within five minutes. Well known securities were shadows of themselves, trading at prices that were practically unheard of, only for the 600 points to revert over the next twenty minutes.
At a congressional review, the error was chalked up to – amazingly – the market’s reliance on technology; the computers had misinterpreted information that led to completely incorrect trading prices. “Human involvement,” said S.E.C chairwoman Mary Schapiro at a hearing over the matter “would have prevented these orders from executing at absurd prices.”
I have consigned myself to never quite understanding the ways of the market; though I think what baffles me most about the day was the ringing out of the stock exchange bell as the markets closed at 4pm. Atop a marble balcony, a gathering stood and pushed the button which set off a loud, tinny ringing that reverberated through the room. Over the heads of the tech hubs, bleeping happily, were the oddly ecclesiastic gold awnings and beige pillars. Traders turned to attention at the familiar sound and greeted it with a smile, gazing up at the bell and clapping along to the ceremonial ring.
This is something I presume happens every day at the market, for the trading day hadn’t been in any way extraordinary to warrant special applause. Shortly after, people began to file out, leaving their buzzing machines behind them as they poured out into Lower Manhattan. This market never sleeps – it has only been closed on a handful of occasions, the most recent being in the wake of Hurricane Sandy, though that only shut the place up for two days. In hell and high water, these people will return again to watch the screens with hawk eyes, their lives depending on the vagaries of an intangible, electric, American God.