Two years after terrorist attacks destroyed its facilities at the World Trade Center, the New York Board of Trade is returning to lower Manhattan. The commodities exchange, which had been operating out of a backup site since Sept. 11, 2001, is inaugurating a trading floor in space leased from the New York Mercantile Exchange. Under a 10-year lease, Nybot and Nymex are sharing 58,000 square feet of trading and office space at Nymex's World Financial Center headquarters.
On the new floor, brokers continue to use traditional open-cry trading--but for the first time, they're getting state-of-the-market technology. Nybot plans to provide brokers, who are generally independent business operators, with PCs to help them be more efficient. "It's going to give them more flexibility as market conditions change," letting them respond faster, says Steven Bass, Nybot's senior VP and CIO.
The trading floor has a new look. Gone are the large electronic wall boards that posted the latest commodity prices. Instead, 800 21-inch monitors--the old exchange had 400--are scattered around the trading pits, giving extra information such as option prices and prices from London exchanges.
The new World Financial Center is home of the Nybot. Nybot scouted 16 sites in lower Manhattan, including the former Lehman Brothers building and a vacant theater in the World Financial Center area, before settling on Nymex. It occupies a 13,000-square-foot trading floor next to Nymex's precious-metals exchange. Nymex has a separate 25,000-square-foot trading floor.
Nybot trades coffee, sugar, cocoa, cotton, and orange-juice contracts; Nymex trades in oil, gasoline, and precious metals. Last year, Nymex traded 134 million contracts, more than six times the Nybot's trading volume.
The Nybot trading floor provides voice and data communications for 1,700 traders working out of 13 trading pits. Trading booths are equipped with handheld wireless trade-reporting systems, LAN connectivity, news monitors, and high-speed Internet access. The trading floor includes a voice exchange and a wireless system.
Electronic order-routing and order-book management systems that Nybot has installed over the past year allow trades to be executed quickly and reliably through handheld wireless devices. Customers send orders over the Internet to a broker's trading-floor booth. From the booth, they're routed to a trader in the pits equipped with a handheld device. Once filled, trades are sent to the customer, the broker, and Nybot for processing.
The Nybot-Nymex setup offers cost-saving opportunities. Firms that belong to both exchanges no longer need facilities in separate locations. The exchanges may eventually explore combined back-office and clearing operations.
They recently licensed onExchange Inc.'s Extensible Clearing System. The system is a next-generation futures and options clearing system that features Internet connectivity, real-time data, and real-time risk management. Nybot plans to have the system installed by year's end. Nymex still hasn't chosen an installation date.
Built on Sun Microsystems' Java 2 Enterprise Edition app-development software and deployable on Sun's Solaris, Hewlett-Packard's OpenVMS, and Microsoft's Windows 2000 operating systems, the system integrates with trade-management, reporting, and other systems.
The exchanges aren't planning to merge IT, but discussions might happen once Nybot settles in. Just moving in together "is such a huge task," Nybot's Bass says, "so we're basically holding off those conversations until we all come up for air and think about what to do next."