Hurricane and Superstorms Sandy was quite historic in many ways. Certainly the size of the storm and the enormous energy behind it along with the storm surge and deluge of rain was almost of biblical proportions. But it was historic for another reason, it actually closed the New York Stock Exchange for two days, something that hadn’t happened in 30 years. My question is why did they have to turn it off? Shouldn’t there be layoffs for something as important as the New York Stock Exchange? Okay, let’s talk.
It turns out that since most of the New York Stock Exchange runs on computers, it is possible to run it from somewhere else. When markets resumed after those two days, one of which coincided with the stock market crash of 1929, traders were unable to use the 4G wireless network or use much of the Internet. This made trading very difficult, though not impossible. Basically, they were operating on a trading floor that was operating at a sub-optimal level. That doesn’t make sense either.
Well, in light of all this, I would like to talk about three main points;
1.) The 1% argument
2.) The secondary location option
3.) Better business continuity planning
In some respects, it is good to have closed the stock market because it shows the 99% that even the 1% still could not do their business in this massive storm. People could have been quite upset that Wall Street continued to operate even though the city was almost in ruins. That wouldn’t have worked very well for the population who went through a terrifying couple of days during the storm, not to mention all the devastation and power outages that followed.
Next, why didn’t the NYSE have a secondary location option? Turns out they did, they have an alternate site where they could redirect everything, and they had plenty of time to get it up and running, and change everything for the next week, until things got back to normal. the subway was running again and all the electricity in the city was on, as well as mobile phones and Internet access.
It seems to me that there needs to be better business continuity planning when it comes to issues that are so important to our financial sector in the economy. It should have been an easy change and just a bump in the road. Rather, it turned into a huge event, which made us wonder how durable New York City and our financial markets are in times of crisis. That doesn’t give investors a lot of confidence, does it? We can do better than this. In fact, I hope you please consider that everyone thinks about it.
Reference article, perhaps of interest?
1.) Wall Street Journal, October 31, 2012, “Returning Traders Face a Struggle in Late October,” by Tom Lauricella, Alexandra Scaggs, and Jonathan Cheng.