|NYSE Goes Electronic; Substitutes Capital for Labor|
|Topic||Production and Costs|
|Key Words||New York Stock Exchange, Archipelago Holdings, electronic trading, labor, capital, costs.|
|News Story||To remain competitive with other trading exchanges, the New York Stock Exchange announced that it will permanently lay off 500 traders, or about 1/6 of its labor force. Such a move will save the exchange about $80 million annually-a hefty contribution towards the $200 million in costs that the Exchange has been trying to eliminate since it merged with Archipelago Holdings in March 2006. After the merger with Archipelago, the NYSE became a publicly traded company.
By reducing its work force, the NYSE is moving farther towards electronic trading, which the merger with Archipelago was designed to do. The Exchange will maintain what it refers to as a "hybrid" trading system featuring both manual and electronic trading. The NYSE also seeks to merge with the Paris exchange Euronext, which has extensive electronic trading capabilities.
Analysts suggested that the labor cuts were necessary and long overdue; many other exchanges, such as the NASDAQ, are already highly electronically oriented and thus more efficient to use. Analysts felt that the layoffs and increased reliance on electronic assets simply allow the Exchange to become more efficient. In fact, most people who follow the markets expect more labor cuts as the Exchange moves farther toward an electronic trading system.
|Source||de la Merced, Michael. "Big Board, Moving Toward Electronic Trading, to Lay Off 500." The New York Times, November 9, 2006.|
|Instructor Discussion Notes|| Discussion
These notes are restricted to qualified instructors only. Register for free!
Return to the Production and Costs Index
©1998-2006 South-Western. All Rights Reserved webmaster | DISCLAIMER