In 1997, a burgeoning computer company, Gateway, was going public. At the time, the New York Stock Exchange attracted showy launches of new offerings, and because Gateway’s mascot was a cow, it made sense to parade a 1,400-pound bovine through the trading floor.
“Management was there to ring the bell and the cow was there to stand under the bell,” Ian Winer, author of the Wall Street memoir “Ubiquitous Relativity,” told The Post. “But the cow started s—ting all over the place. People were behind the cow with buckets, but they couldn’t keep up with her. The smell was terrible.”
Looking back, Winer now sees the event as a harbinger of what was to come.
“The cow s–ting on the trading floor was a metaphor for the end of the [human operated] Exchange — especially since the cow was there for a computer company.”
Soon after, fresh technology ushered in a largely automated New York Stock Exchange. Scrums of classically scrappy traders with sharp elbows, loud voices and pointing fingers have become an endangered species, as trades are increasingly made via computer with limited floor-broker involvement.
Since 2002, the NYSE has condensed from five rooms to one with two trading floors. While there used to be some 5,000 floor brokers and support staff during the Exchange’s 1990s peak, the number is now closer to 500, according to an NYSE spokesman. The audible roar of business transacting is gone.
“You could roll a bowling ball through there and not hit anyone,” said Peter Costa, former governor of the NYSE and, until last year, president of Empire Executions, a now defunct boutique brokerage firm at the Exchange. “The whole floor could hear me sneeze. It’s mostly people sitting there, looking at their tablets, watching what is trading.”
For investors making large buys or sells, on-the-spot brokers do serve a purpose. “With significant trades — of more than 10,000 shares — there is a higher likelihood that a broker will get it done properly,” said Costa.
But the once-mighty salaries and bonuses for these existing brokers are shrinking, too, as automation makes the buying and selling of stocks more efficient, slashing transaction costs. “Now everybody wants to trade for free. Nobody wants to pay for anything,” Costa said.
Costa told The Post that the typical broker income these days is around $150,000 per year. And, on top of that, “the bonuses are very minimal,” he added, saying they’re unlikely to exceed $25,000 — a huge drop from the 1990s, when bonuses for floor traders were as high as $500,000. “There is not the excess cash flow on the floor that there used to be.”
While the Exchange now feels like a patient on life support — albeit one loaded up with technology — it used to resemble a frat party. Gambling, drinking, surreptitiously snorted lines of coke and last-minute jaunts to Atlantic City all went on after the close of the trading bell back in the ’80s and ’90s, Winer said. “We’d go down, gamble all night, roll back in at 8 and change our shirts without sleeping,” he recalled.
And if you happened to fall ill in the middle of trading, sympathy ran thin. “When somebody collapsed from a heart attack or stroke,” Winer recalled, “he got stepped over.”
In 1976, Alice Jarcho emerged as the first female to regularly trade on the floor, and the men didn’t make it easy for her. The atmosphere was raucous and rife with practical jokes.
“There was relentless harassment,” said Jarcho, who quit in 1980. “Guys would leave condoms with mayonnaise on them in my drawer. They’d spit on my Tab can and send me dildos through the pneumatic tubes [that were used for shipping order slips]. There were constant references to my body. It never ended.”
Since its 1792 founding by 24 brokers, the New York Stock Exchange has been the place you went to make money. But until 1880, it was done quietly, with well-behaved traders sitting in seats and bidding on offerings in an orderly manner. By the roaring ’20s, the Exchange evolved into a madhouse where insider trading was not frowned upon. According to “The Great Game: The Emergence of Wall Street as a World Power, 1633-2000” by John Steele Gordon, Albert Wiggin, then the head of Chase National Bank, shorted 42,000 shares of his own company’s stock (that is, he bet that it would lose value) just before the market’s historic crash in ’29.
During the 1930s, insider trading was made illegal and Merrill Lynch soon popularized stock-market investing for average Americans. Wall Street became a pop-culture phenomenon. Visiting the NYSE was a photo-op for politicians, celebrities and business-world elites. Over the years, giddy ringers of the opening bell included Sylvester Stallone, Martha Stewart and Kevin Durant. While being shown around the exchange in the early 1970s, Kirk Douglas had talcum powder dumped on his fancy loafers — a move known as “powdering” that left the actor unimpressed.
In 1985, Ronald Reagan became the first US president to visit the Exchange. The economy had dipped and he vowed to drive “the bears back into hibernation.”
Seven years later, an out-of-office Reagan returned to the Exchange, this time with Mikhail Gorbachev in tow. They repaired to the Exchange’s boardroom where Gorbachev was shown a gorgeous Fabergé urn created by Czar Nicholas, which was given to the Stock Exchange in the early 1900s to commemorate the listing of Russian railroad bonds — which quickly came to be worth zero dollars.
“That is a very nice urn,” Gorbachev told board member David Shields, who now heads the brokerage firm Wellington Shields. “I’d like to have it back.”
Thinking quickly, Shields replied, “I’ll give you the urn if you redeem your railroad bonds.”
The precious urn remains in the boardroom.
In 2008, stocks collapsed, leading to what became known as the Great Recession. “Over one year the Exchanges lost 60 percent of their value and there was a sense of despondency [at the NYSE],” said a floor trader from that period who asked not to be named. “The closing bell rang and people didn’t feel wealthy enough to spend $400 on a bottle of wine and $600 on dinner. They were talking about selling their country houses.”
The years that followed didn’t just mark the end of an era, they marked the end of a world. “Tanking of the market sped up the use and innovation of technology,” said the trader. “In turn, technology opened up more venues for trading, which fractured the New York Stock Exchange.”
Heads of trading desks moved uptown, while hedge funds gravitated to Greenwich, Conn., and back-office operations headed across the Hudson River to New Jersey.
Unlike after other crashes, the trader added, “it will never go back to the way it was.”
Despite it all, for the near term at least, the NYSE appears unlikely to close for good.
Though Costa described its future as “a race to zero,” he pointed out that there are reasons for resiliency: “Because companies pay a lot of money to be listed on the Exchange, it will be an ongoing entity [that supports itself]. Right now, around 20 percent of trades are made on the Exchange — while back in the 1990s it was around 90 percent — and I don’t see it going lower than 20. The opening and closing of the New York Stock Exchange is when prices are established and that will remain important.” (An NYSE spokesman said it was 85 percent in the ’90s and 25 percent today.)
One person in agreement is Peter Tuchman, 61. He’s been on the floor for 35 years, is bullish on the NYSE and ranks as the Exchange’s most photographed trader.
“There’s no sign of me leaving,” Tuchman told The Post. “My business is robust, the market is booming and the New York Stock Exchange is an incredibly relevant place to this day. The contraction is a function of the technology that has come onto the floor. It does not replace humans but it makes for less people.”
Maybe, but the skills that once made traders great are becoming obsolete.
“When people tell me they want to get into the business and I ask them what their math skills are — I mean it in terms of computers, not the mathematics of trading,” said Gordon Charlop, managing director and partner at the brokerage firm Rosenblatt Securities. A trader since 1980, Charlop added, “Quickly doing math in your head is not required the way it used to be. Understanding the algorithms is now more important than doing algebra.”
Some former brokers are using knowledge gained on the floor to create the very algorithms that are turning them into dinosaurs. “They sell computer programs to their clients,” Costa said. “They’ve gone to the dark side.”
Meanwhile, brokerage companies that want to thrive in the digital age are looking for income streams that go beyond the trading floor.
“We used to floor-trade exclusively, but now we have new products that cater to the new-market paradigm,” Charlop said. “We’re a leader for providing research; we put together conferences and do introductory banking [i.e., aligning companies for mergers and acquisitions].”
But Charlop, who got in on the Wall Street game after graduating from college as a forestry major, bemoans the fact that starting as a know-nothing trading-floor runner is no longer an express lane to bigger and better things.
“Working on the stock exchange used to be a golden opportunity,” he said. “Now it is just an opportunity.”
After more than 200 years, the NYSE is finally reaching obsolescence.
1792: Underneath a buttonwood tree, near the southern tip of Manhattan, 24 brokers and merchants sign the Buttonwood Agreement. It is a contract by which they agreed to trade securities in exchange for commissions.
1817: Rooms at 40 Wall Street served as headquarters for the New York Stock Exchange.
1867: The invention of the stock ticker made it possible for investors to keep track of stock prices, even from locations outside of the New York Stock Exchange. Serious traders got offices near the exchange, since proximity led to more accurate quotes on the tape.
1929: On October 24, 1929, known as Black Thursday, the stock market crashed. Fortunes were lost and lives were ruined. Since there were no TVs and few telephones, crowds gathered outside the Exchange. People were hoping to find out what happened to their money.
1954: Twenty-five years after Black Thursday, the Dow Jones industrial final went above its high of 1929.
Early-1980s: The NYSE trading floor dress code requires the wearing of jackets. Tired of getting their expensive sport coats marked up with pens, traders the iconic cotton/poly blend “traders jackets” that have since become ubiquitous on the floor.
1987: Following a wildly profitable streak, the Dow went down by 22.61 percent. This lives on as the greatest one-day drop in the Dow’s history. Anticipating a disaster, the Exchange’s managing director of floor operations put a hand to his chest – which he characterized as the “gladiator’s salute.” He said that it means, “We who are about to die, salute you.” By day’s end, traders were hobbling around the litter strewn trading floor and investments were decimated.
1999: The Dow Jones industrial crossed 10,000 for the first time. It was met with a ton of hype. New York Stock Exchange chairman Richard Grasso tossed “Dow 10,000” baseball hats onto the trading floor. Charles Schwab insisted, “It’s just a number.”
2008: Traders on the floor of the New York Stock Exchange freaked out as the Dow dropped 777 points, contributing to a global sell-off of securities that led to the Great Recession. Traders stood in shock, with hands over mouths as they watched the market collapse.
2020: The Dow crossed 30,000. Hats with that magic number are visible on the trading floor. But with the exchange having shrunk precipitously and most of the action taking place electronically, the frenzy seems muted. Those watching at home — as so many former floor traders are — can now buy their Dow 30,000 hats on Etsy.
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