Due to increased competition from the Nasdaq and online brokers, the New York Stock Exchange has spent over $2 billion (€2.1 billion) on technology in the past decade to ensure that the NYSE remains the world's premier exchange.
This was one of the points made two weeks ago by the chairman of the exchange, Mr Richard A. Grasso, during a tour of the NYSE's three-dimensional trading floor. The occasion was the third annual Wired Index event presented by Wired magazine, NYSE, Investec Guinness Flight and Visteon.
The centuries' old trading floor, which is a 36,000 sq ft facility on Wall Street, is designed specifically to be a centralised auction that represents buyers and sellers. About 3,000 people including specialists, brokers and support staff all work there busily executing orders to buy and sell shares in any of the 3,665 companies listed on the exchange.
The floor has 17 trading posts, each manned by a specialist. Each listed security is traded in a unique location at one of these posts. Computer monitors above each specialist location indicate which stocks are traded. The monitors also list a stock's last price and whether it has seen an increase or a decrease from the previous price.
For the exchange operations personnel, whose function is to make sure everything runs as smoothly it should, tracking what was happening was a frazzled affair. All they could view was a two-dimensional, alpha-numeric screen. That was, until last year, when their work lives became a lot easier.
On March 8th, 1999, the New York Stock Exchange opened a three-dimensional trading floor with its command centre located between the two main trading floors. The purpose of the 3-D trading floor, or 3DTF as the exchange refers to it, is to give the NYSE operations staff an interactive virtual representation of the trading floor so they can monitor all business and systems activities. The 3-D trading floor consolidates all the data streams of the NYSE into one 3-D graphic visualisation system that makes the operations staff better able to respond to system or stock-related events.
"It's like the air-traffic control tower for trades," said Mr David Gurney, director of floor operations. "We're the single point of failure."
The benefit of the new system, Mr Gurney added, was that "this takes multiple feeds and puts them all in one place. It shows us what's going on, where it's going on, with good visual imagery".
The 3-D image is depicted on nine 25-inch flat-panel monitors. The monitors allow the operations personnel to link a stock's trading data to related news and company announcements via live news feeds. The monitors also depict the network traffic graphically, thereby allowing the exchange staff to pinpoint and investigate any computer network-related problems that may arise. So, they have the ability to identify which workstations on the trading floor will be affected by a network problem.
The prototype for the 3-D trading floor was first built in 1994 after exchange executives saw a 3-D demo by Silicon Graphics, a supplier of visual computing systems. The NYSE executives saw the potential for a 3-D computer-generated representation of the trading floor that would allow events on the trading floor to be seen and understood at a glance.
Mr Grasso, the chairman of the NYSE, said the whole concept of the 3-D representation was not just to have a modelling tool to evaluate business, but to eventually export it out to customers.
"We've wrapped technology around people," Mr Grasso said. "Technology, as soon as it's cheap enough, will be exported out to the trading desks where people can mine data and see the history of a stock." Say, for example, someone wants to see what's going on with America Online's stock. He finds post 5 and panel R, where he knows AOL is traded. At 5R, he can electronically file a report to a dealer on the floor who can then execute on that order.
Alternatively, if a user so wished, he could check on a listed stock by typing in an industry code or a country code. For example, if he typed in Ireland, all five Irish companies listed on the NYSE would show up and with a computer mouse he could drill down into any of them for further details. He could see the normal order flow at any time of day or he could replay the day's data.
The information comes into the 3-D Trading Floor from several sources.
The NYSE has two computer sites - one in Manhattan and the other in Brooklyn. These sites are connected to a Common Message Switch gateway that connects into the NYSE's SuperDot system (which stands for SuperDesignated Order Turnaround System).
The central messaging system connects the 17 trading posts on Wall Street and three posts at NYSE's other location on 30 Broad Street. Specialists receive orders through the SuperDot system and execute them at their posts. They then return reports to the originating firm's offices via the same electronic circuit that brought them to the floor.
SuperDot can handle daily volume exceeding two billion shares. The round trip for a market order took 20 to 22 seconds, said Mr Gurney. The transit time only took up about three seconds of this time; the rest of the time, he said, the specialist was exposing the order for price improvement.
"The most messages we've seen are 455 messages per second over a five-minute average," said Mr Gurney. But, the system can handle peak capacity of 1,000 messages per second. "We're moving towards faster execution than what we have now, even though what we have today is good," he said.
