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Nyse e-trading takes toll on floor specialists

15 May 2007  |  5577 views  |  0 New York Stock Exchange

The shift to electronic dealing at the New York Stock Exchange (Nyse) is continuing to take its toll on floor specialists with brokerage Sanford Bernstein eliminating all floor staff and securities firm Bear Stearns writing down the value of its specialist business by $225 million.

Sanford Bernstein, a brokerage owned by the money manager AllianceBernstein, has axed its trading staff on the floor of the Nyse and moved to an all-electronic operation.

John Meyers, a spokesman for AllianceBernstein, told reporters that the firm had moved so much trading to "an electronic mode" and will likely continue that trend "we decided we no longer needed a presence on the floor".

In another move Bear Stearns says it has acquired the minority interest it didn't own in its Nyse specialist unit, Bear Wagner Specialists, from Hunter Partners and will book a $225 million noncash charge to reflect the reduced value of the business.

In a statement Bear Stearns chairman and CEO James Cayne says the group is buying the remainder of Bear Wagner Specialists to "give us more flexibility in managing the business in this changing environment".

"The implementation of the Nyse hybrid system has dramatically reduced the opportunity of specialists to earn an appropriate return and has necessitated the write down of the intangible assets to accurately reflect the current value of the business," says Cayne.

Peter Murphy, CEO of the Bear Wagner unit, says: "Bear Wagner has been supportive of the exchange's implementation of its hybrid system but it is becoming painfully clear that the specialist system, and the value that it brings to the investing public with regard to trading transparency, committing capital and providing liquidity, is rapidly approaching the point where it is no longer a viable business model."

Nyse's move to a combined floor-based and electronic market has forced many specialist firms to cut floor staff in response to increasing use of program trading.

JPMorgan Chase reportedly cut six of 14 jobs at Nyse last week, while Swiss bank UBS in thought to have cut 23 jobs from its 30-person trading floor staff at the exchange in March.

In January Nyse specialist Van der Moolen cut 55 floor jobs - 30% of its US workforce - just as the Nyse moved all listed securities to the hybrid platform.

Lehman Brothers, Goldman Sachs and LaBranche & Co have also scaled back Nyse staff.

In February Bank of America laid off a further 43 Nyse specialists and clerks - which is in addition to 40 laid off in January - and warned staff that more job cuts were on the way.

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