'A Very Different and Dynamic Picture of Today's NYSE Trading Floor'

In the two-sides-to-every-story context, two letters representing the views of hundreds of NYSE floor brokers were sent to the Wall Street Journal to add a bit of balance and reality to an article that appeared in the newspaper’s May 4 edition. The Journal has not printed the letters, and since we feel it's a story worth telling, here are the letters. Feel free to weigh in, as the vast majority of NYSE floor brokers are proud of what they do for their customers.

In response to Mary Pilon's article, "The Big Bored: NYSE Traders Look For Diversions as Life Slows on Floor" (May 4), the Organization of Independent Floor Brokers (OIFB) would like to offer a very different and dynamic picture of today's NYSE trading floor.

The NYSE is an enduring symbol of the American economy. During the last three years, however, there has been a metamorphosis of the NYSE trading floor. The technology has changed, the market model has changed, and as we all have witnessed, the economy has changed. The majority of the NYSE floor based businesses have embraced these changes. Our business models have continuously evolved to better serve the investing public.

Ms. Pilon has chosen to focus on the woes of a small percentage of our community rather than the successful businesses that our members have built. After interviewing a cross-section of our community Ms. Pilon chose to incorporate only the comments that served her negative bias. She portrayed us as a community of pathetic, movie watching, lamenters of the past. Quite to the contrary, we are experienced business owners and practitioners who keep a constant eye to the future. Our businesses are successful, consisting of strategically positioned execution platforms. We spend our days involved in the diverse demands of business and are not "flat out bored."

We are extending an open invitation to any member of the press to spend time with us on the trading floor. We are eager to display our professional attitude and acumen. Finally, we are determined that we, the human part of today's marketplace, will evolve, prosper and continue to be an integral part of the world's capital markets for the foreseeable future.

Jonathan D. Corpina - President, OIFB
Jennifer I. Lee - Vice President, OIFB
Stephen O'Shaughnessy -- Board Member, OIFB

This letter is in response to the page one article entitled “The Big Bored: NYSE Traders Look for Diversions as Life Slows on Floor.” Unfortunately the reporter, Ms. Pilon, interviewed a small group of our community and grossly overstated the current situation. The floor now consists of Designated Market Makers (DMMs), House Brokers, and Independent Brokers. Ms. Pilon incorrectly described the community as being left behind the times by the increase in electronic trading. We have faced enormous challenges to our core business models over the last five years, yet we have found a way to adapt, survive and even thrive in this new trading environment.

Some of the more recent regulation changes including NMS forced our quotes to be electronically accessible which changed most of the trading that takes place on the floor from manual to electronic. Automation thins the numbers in any business, but with all change comes opportunity. It is true that our busiest time of day is during the open and close. Those prices, which are the standard to the entire financial industry, need to be manual transactions. Brokers and DMMs work hard each morning to “get the price right” by representing large institutional and retail order flow. While the floor seems quiet after the opening prints, it is also true that brokers have adapted to the new market structure.

True price discovery is still best accomplished by focusing supply and demand information to a single point of sale. Throughout the day brokers are finding innumerable ways to add value through price discovery and execution capability both electronically and manually.

Brokers on the floor still offer more information at the point of sale than any ECN could ever provide. Our community also has embraced the electronic world by creating a New Market Model in which agents (brokers) marry the benefits of parity with multiple order types and algorithms. This ability makes our marketplace truly unique. DMMs have replaced the specialist community and are finding new ways to show liquidity to institutional customers who seek blocks of stock. DMM participation is up over the last few months and the quality of our market place has grown stronger.

There may be some within our community that wish for it to return to the glory years of manual transactions and eighty percent market share. However, the financial community should know that the floor is here to stay. We have reinvented our business models and you would be remiss to ignore what we have to offer.

Patrick Armstrong
Daniel Tandy
Co-Presidents
Alliance of Floor Brokers