What do you do when a cathedral of capitalism becomes antiquated? You turn it into New York's best party space.
The New York Stock Exchange has lost most of its famous shoulder-to-shoulder bustle in the age of computerized trading. So it's hoping its status as an icon of American finance will be a popular draw for cocktail receptions, analyst presentations and other festivities.
The exchange, where traders have nervously watched tickers and shouted orders for more than 100 years, is already available for some events. It wants to expand to 1,000 a year, double the number from three years ago.
Think black tie, not Black Monday.
"Planners are always looking for something that's different and unique, and there's only one stock exchange," said Ken Edwards, an executive at SmartSource Rentals who serves as the president of the New York chapter of a national meeting planners organization. "From an experience standpoint, that it's getting a facelift now is an absolute sign that they think that there's a recovery going on."
In addition to the trading floor, the exchange rents out updated meeting spaces to companies and charities. They include vaulted-ceiling dining rooms and a lounge with gilt-edged walls that used to be a club for stock traders. Company officials wouldn't say what they were spending on the renovations, which are expected to be finished by the end of next year.
It's a renovation borne out of necessity. Hosting meetings is a small part of the company's overall profits, but shows how far the building has come from its days as the center of the daily churn global capitalism. Since the last renovation of the building in 1995, the business model of the stock exchange has changed drastically.
Fewer traders than ever actually work on the floor. Steven Grasso, the director of institutional sales at Stuart Frankel & Co., compared stepping onto the floor of the New York Stock Exchange for the first time in 1994 to walking out of the dugout at Yankees Stadium. Traders stood shoulder to shoulder on the trading floor, screaming at each other and into telephones, their feet littered with discarded orders.
"Now, I can do more with my hand-held device than I ever could back then," he says, swinging his arms wide on the trading floor.
No other trader was within 10 feet of him.
There are a couple of strategic reasons for the renovation, which comes while the company's future is uncertain. NYSE Euronext Inc. agreed in February to be acquired by a German exchange operator. Last week, however, its longtime domestic rival Nasdaq OMX Group Inc. announced that it had teamed up with derivatives operator IntercontinentalExchange Inc. to offer a 19 percent higher bid. Both proposals are still pending.
NYSE Euronext gets more and more of its profits from companies that list their shares on the exchange or rent out its rooms. The company brought in $3.1 billion in revenue from trading last year, down from $3.5 billion two years ago and the second year of decline. That figure includes both the conventional trading of stocks but also the far more lucrative business of trading more exotic financial instruments like options and futures contracts. At the same time its stock listings business has grown from $395 million to $422 million.
The company now brings in nearly 25 percent less money for each 100 shares handled compared with two years ago. At the same time, the number of shares it handles are dwindling. A decade ago, the trading floor of the New York Stock Exchange accounted for roughly 80 percent of the volume of the blue chip stocks listed on it like General Electric Co. and Procter & Gamble Co. Now, thanks to regulatory changes and the rise of electronic exchanges such as the Kansas City-based BATS, the figure is closer to 25 percent.
The exchange building is seen as an asset that gives the company a premium brand. The prestige and media attention devoted to its trading floor have long allowed NYSE Euronext to charge companies more for listing their shares than its competitors. "The building itself is a part of our legacy and a big part of our (value)," said Joseph Mecane, an executive vice president at NYSE Euronext Inc. who oversees the listings of U.S. companies.
The building and trading floor are attractive for suitors like electronic-only exchange Nasdaq. "The trading floor is fantastic for marketing," said Michael Wong, an analyst at Morningstar. "Every company would like to ring the opening bell at the New York Stock Exchange, and that's an intangible that BATS or another competitor can't duplicate."
The last physical upgrades to the exchange building were completed in 1995. Since then, NYSE Euronext has devoted more of its resources to upgrading its technology. The company opened a 400,000 square feet data center 30 miles outside of Manhattan in suburban Mahwah, New Jersey last year. Its servers are now at the heart of the exchange, routing trade orders coming from humans and computer programs.
Lou Pastina, the executive vice president of operations, said that the renovations to the building are the next logical upgrade. Each of the 11 brown trading posts in the center of the trading floor will be replaced. New, wider versions will have blue countertops, additional screens, and brighter lighting. The wall of dark glass at the front of the building will be replaced with windows that bring natural light onto the trading floor. And in the middle of it all, a small television set will allow CNBC anchors to conduct interviews from the floor itself.
Traders say the upgrades are part of the evolution of the stock market. Better data screens will make day-to-day orders run more smoothly, while the wider trading booths will make it easier to communicate with other human traders during large market swings, said Richard Rosenblatt, the head of Rosenblatt Securities who has worked in the building for decades.
"When I started here, the telephone was considered technology," he said. "The market is always moving forward."