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The latest thing in the labs of the NYSE is a voice-recognition system that allows traders to call in their orders rather than key them into the computer and that can filter out all the background noise of the exchange, and respond to any kind of accent from British to Brooklynite to Jamaican, and a whole series of code names and variations on broker jargon. "Buy, 5000, Big Blue, at the market, not held, send!" barks a trader at a trading booth computer, and the order is flawlessly filled and executed. He is being studied through a one-way mirror by a team of "human factors" experts, who bring top-notch traders from the trading floor to a lab room, and watch them struggle to trade using different kinds of technological innovations. Based on their observations, they refine the technology to override any possible glitches in the trading process. In this case they spent 13 years testing, shelving, and refining voice-recognition software, which they estimate will be ready to hit the floor at the end of September.
But this technology may be reinforcing an archaic system of trading: what's the use of refining voice-recognition software, or retinally controlled data-retrieval goggles, if the NYSE is under pressure to shift into an entirely electronic system anyway? The innovators at the exchange don't think the floor is going anywhere, or hope not, because plans are well under way for a luxurious new NYSE headquarters on Wall Street designed by Skidmore, Owings and Merrill. And of all NYSE-listed stocks, only 15 percent are currently traded through exchanges other than the NYSE.
From a purely technical standpoint, the processes and tools they develop to streamline the operations in this Olympian factory of prices are stunning. On an average day, over $37 billion is traded on a volume of 810 million shares. The system supports over a million orders a day and has to be "99.99 percent up," according to Pastina. "You don't stop the market; you hit 'recovery.' We build recovery systems into everything we do."
This past spring, the exchange installed a 3-D trading floor, an elaborate three-dimensional data filtering system that graphically interprets in a VRML (Virtual Reality Markup Language) format all the numbers and code that get pumped through the exchange, from the below-ground operations of all the servers to the real-time activity of every individual stock.
The advantage this mapping system has over straight numbers is context an immersive interface that makes clutch decision-making more intuitive, not to mention more pleasant.
The project was organized by the Securities Information Automation Corporation (SIAC), which manages the entire technological backbone of the exchange and commissioned New Yorkbased architecture firm Asymptote to design the model and RT-Set, an Israeli firm, to program and animate it. Hani Rashid, a founding partner of Asymptote, which does both physical and information architecture, describes the technology as "datascaping: a new idea about mapping 2-D data into animated, 3-D environments," adding, "Our program translates all the data into shapes and graphs in a contextual environment, morphing real-time, that you can customize and correlate on the fly."
For systems analysis, operations experts look at the virtual landscape of the floor itself and can monitor all the activity at every booth; the graphics pulse and change color to indicate volume and speed of order flow at every booth, and indicate if there is any problem with the performance of the hardware or system software. For financial analysis, traders could customize a landscape of data that charts the real-time activity of any collection of stocks, and supplement that with background information and historical data. If the Dow is down 88 points, you can see which stocks are weighing it down most. Then you could get a profile of all the hot news on the wire, cross-reference it with your profile of Dow activity, and see the common trends in the markets and news.
"You can't separate the system performance from the data that it's monitoring," says Anne Allen, senior vice president of floor operations. "It's not enough to know just that there's a failure you need to know the implications. Am I delaying traffic? How does that relate to trading volume and everything else that affects the stocks?" In other words, the software itself illuminates the synthesis between the data processing and the patterns of the market.
But still the main thing that affects those rhythms is the system of trading itself, and no one has any idea what will happen to various trading systems themselves. Will the specialist system survive all the criticism just as it survived the crashes of 1929 and 1987? Will it be scrapped for a whole other form of centralization? Will the market bifurcate into two kinds of trading systems one that's centralized and one that's direct?
NASDAQ's volatility is as much a reflection of its listed companies as its trading system. The NYSE, on the other hand, has such stable companies that the transition to an electronic market may not be dramatic: "If the NYSE were to transition to an electronically based trading system, I don't think you'd find a problem with excessive volatility," says John J. Edwards III, markets editor of TheStreet.com. "There would still be professionals making the markets, just not a floor-based specialist." What makes the transition difficult, however, is that a lot of companies on the exchange would prefer to stay with a specialist-based system.