Guest Column: Day Trading: A tale of two stock exchanges

Editor's note: Springfield Business Journal summer intern Katy Steinmetz was in New York May 26-29 with her University of Missouri business reporting class.

They had used a cage to protect a pregnant woman - or, more specifically, a pregnant female broker. That is how raucous trading can get on the floor of the New York Mercantile Exchange, our tour guide told us. And raucousness was exactly what I wanted, after having been rather disappointed earlier that week with the timidity of the New York Stock Exchange.

NYSE high jinks

Standing in an open gallery above the NYSE, I found myself wishing for water balloons; my inner Dennis the Menace couldn't help but imagine how easy it would be to hit one of the many men (or few women) walking below me between the walls of ceaseless tickers.

I hadn't come to the NYSE thinking I would have time to contemplate high jinks. As members of Millipore, a bioscience research company, stood on a balcony above the floor and rang the bell, I readied myself for chaos, for the bawling of offers and barking of orders to panicked clerks. What I got was a roomful of people staring at wireless "e-broker" tablets the size of chocolate boxes, a subtle lunchroom buzz and random clings that perfectly evoked a pit of slot machines.

Tame though the view was, I still felt privileged to have it. The exchange has been closed to the public since Sept. 11, 2001, and I was allowed to visit only because I had taken a business journalism class with a savvy, string-pulling professor, Marty Steffens.

Our tour guide, NYSE Vice President of Communications Ray Pellecchia Jr., explained that as the audible volume had quieted, the volume of trades had skyrocketed. Those little tablets allowed shares to be moved algorithmically and in 100 milliseconds. An average day saw 1.7 billion shares traded, up from roughly 30 million in the paper-and-pencil days of the 1960s.

Chaos over commodities

Elsewhere near Wall Street, however, increased trading and raucous behavior still co-exist. Later in the week, my professor arranged a visit to the New York Mercantile Exchange, where the swapping of contracts for generic commodities, from gold to natural gas, controls costs of the world's raw materials.

From that gallery, I watched testosterone-infused pits of brokers signal their offers, and the right change in numbers set off almost violent competition of bids - hence the caged mother-to-be trader. The floors were littered with papers that occasionally blew through the air like ticker tape; no time to wish for water balloons at the NYMEX.

The 137-year-old marketplace, which is also closed to the public, experienced a huge increase in trades and decrease in floor activity after going electronic, but the swapping of futures and options is more complex than trading stocks, so a good portion of business, our guide promised, would always be done face-to-face.

Watching those exchanges is more exciting than watching any competitive sport. The end result of baseball, for example, is essentially a count of how many times guys ran in a circle. The end result of the deals made by the brokers, on whose faces the panic reads like a billboard, can be the making or breaking of financial lives.

Lack of tablets aside, the NYMEX seemed generally more human than the NYSE. The brokers donned casual collared T-shirts, a dress code that was instituted after the World Trade Center fell and left lingering ash that ruined the suits of brokers as they trod to work after the tragedy.

NYMEX traders also use nicknames, usually composed of three or four capital letters on a badge, because they allow for easy identification when, say, a seller wants to yell at a buyer across the rowdy pit. One broker, our guide told us, had gone by FIRE until someone pointed out that traders probably shouldn't be yelling that indoors.

Different though they were, seeing the action in both exchanges left me with the same thought: Whether it's done with electronic stylus pens or wild hand signals, business will go on, even in the gloomiest of times.[[In-content Ad]]SBJ intern Katy Steinmetz is a graduate student at University of Missouri School of Journalism. She earned her undergraduate degree in English from Columbia University in New York.