It’s Hard to Be a Power Broker on Wall Street Without Electricity
It’s hard to be a power broker on Wall Street when you have no electricity.
It’s a fact that Wall Street is the manifestation of financial power in America and possibly, the world. What happens when that the furnace of financial trading is doused by the waters of the Hudson and East Rivers? What happens is a lot of building basements get flooded, and if you think the power of these firms sits atop the penthouse floors next to varnished cherry wood desks with Montblanc pen sets, you’d be wrong. The power is in the basement and on Oct. 29, the power went out.
Even as power gets restored, a variety of damages is keeping offices closed, be they financial or nonprofit groups. Bloomberg.com reported that as of Nov. 12, nearly 29 percent of Lower Manhattan office space has been out of operation since Hurricane Sandy hit the streets. For instance, Cantor Fitzgerald LP won’t return to its office at 199 Water Street for the next 6-8 weeks and the New York Daily News will wait a minimum of six months before re-occupying 4 New York Plaza, according to Bloomberg News.
Buildings in the financial district are also the home to small trading firms that provide a large amount of liquidity to many U.S. markets. These firms, many with less than 100 people, use electronic trading systems to place and execute orders on the various financial exchanges.
When Sandy’s storm surge flooded the buildings that house these firms, not only did they lose lighting and elevator service, but their telecommunication gear (typically located in the basement) was completely destroyed. The brackish and salty water instantly destroyed the electronics that powers the telephone and network traffic. With no phones and no network connections, there would be no orders to and from the exchanges.
The New York Stock Exchange, NASDAQ and other U.S. exchanges took Monday and Tuesday off, the days bracketing Sandy’s landfall, but come hell or high water — usually a metaphor but now an apt phrase — they were opening on Wednesday. That meant many of these smaller trading outfits had to figure out how to get their office and trading systems up and running. They had to do this without power, Internet, phones or even a working elevator to fetch needed equipment that stayed dry on the upper floors, but was powered off. Network engineers and traders hauled computers down flights of stairs to take them to places where they could be put to use.
These tools of the trade were often transported to apartments that were spared from the blackout, turning employees’ or owners’ homes into trading shops and temporary office spaces in Midtown and Uptown Manhattan. Ad-hoc networks were built to connect the traders workstations to the various exchanges. Some firms were able to get into the markets on Wednesday, Nov. 7, but market volumes indicated that many did not.
Of course, the big banks and trading firms have disaster recovery sites for seamless transference of business procedures to other locations, but many smaller firms don’t. You’d be surprised how much equities are traded by firms that consist of just a handful of people.
As for the major exchanges, you’d think they’d be spared all of this disruption, but they were hit just as hard. NASDAQ, BATS, and several other major exchanges located in Northern New Jersey did not have any power from the grid all week after Hurricane Sandy. Instead, they powered the thousands of computers that trade billions of dollars of stocks every day using a large array of diesel generators and fuel tanks large enough to run days on end.
Given the size and the scope of the damage, it’s amazing that some of these small firms got back into the markets that first Wednesday after the storm. Many firms will remain in temporary office space and it may not be until the end of the year that the diaspora of small financial firms return to their original office space. Either way, those firms that overcame these challenges will have a story to tell.
Brian Goldberg is a computer engineer working in the financial sector in Lower Manhattan. He also has several years experience in construction as a project engineer, and now has several days experience in flood remediation.