The New York Stock Exchange expects to resume operations on Wednesday after the biggest storm to have hit New York City since at least 1938.
But as Hurricane Sandy barreled towards the East Coast on Sunday night, NYSE Euronext was locked in a battle of wills with trading firms over whether to open at all on Monday, Reuters reports.
NYSE said it was planning to open for business on Monday as an electronic-only trading venue for the first time.
But dealers trading shares were highly skeptical of the plan, according to Reuters’ sources. After all, the system was unproven, and employees might not be able to get to work safely, or at all. The exchange is located in an area that lay directly in Hurricane Sandy’s path.
If the NYSE had opened for business on Monday or Tuesday, its electronic systems may have had to handle more than double the volume it had averaged in recent weeks, Reuters said.
Given the number of high-profile electronic glitches the markets have experienced in the last few months, that was a prospect market participants were highly resistant to.
Firms also did not want their employees to travel to work in the midst of a storm of virtually unprecedented strength.
Late on Sunday night, the NYSE and other exchanges finally decided to close the market on Monday. It was first time the Big Board had taken this decision for bad weather since Hurricane Gloria in 1985.
The final decision to shut down operations was collectively taken by all the exchanges, including Nasdaq OMX and CME Group.
Late on Monday night, as Sandy unleashed havoc on the East Coast, NYSE and Nasdaq both said that on Tuesday they would run tests as part of a new contingency plan to see if an electronic-only market could resume equity trading in major names as soon as Wednesday, should the NYSE floor not be able to reopen.
The new plan involves keeping the NYSE closed and performing its trading and auction functions on NYSE Arca, the company's all-electronic exchange, the Wall Street Journal reported.
BATS Global Markets and Direct Edge meanwhile were also set to continue testing a backup plan in the event the floor could not be reopened, according to the WSJ.
Ultimately, when the storm made landfall on Monday evening, it brought widespread flooding and power outages to areas including Lower Manhattan, which is home to Wall Street and the exchange.
Howeve, despite initial reports suggesting the trading floor had been flooded, NYSE appears to have avoided any physical damage.
Analysts now estimate that exchanges and banks are losing tens of millions of dollars in revenues every day.