NYSE Group Cuts 520 Positions

Ivy Schmerken, Wall Street & Technology

NYSE Group will reduce its workforce by 520 positions as part of an organizational downsizing aimed at cutting costs and improving efficiencies, it announced on Wednesday.

The staff cuts impact approximately 400 employees and 120 full-time consultants from its New York Stock Exchange (NYSE), NYSE Arca and Securities Automation Corporation (SIAC) business units.The downsizing, which is effective immediately and extends through March of 2007 for certain positions, excludes NYSE Regulation, reflects ongoing initiatives to cut costs and improve efficiencies, eliminate duplicate services and leverage synergies resulting from the March 2006 NYSE-Archipelago merger, the exchange operator said in the release.

Since March of 2005, when NYSE, Archipelago Holdings and SIAC had 3,484 employees on a combined pro forma basis, the exchange has trimmed its workforce by over 950 employees. Excluding NYSE Regulation, this represents a 35 percent workforce reduction, the release said.

Separation packages will be offered to those individuals whose positions are being eliminated, and outplacement services and retirement benefits will be offered to those who are eligible to receive them, the release stated. As part of the NYSE Group's recent acquisition of SIAC, about 150 SIAC positions will become part of the American Stock Exchange as part of the workforce reduction.

News of the staff reductions falls on the heels of last week's announcement of plans to consolidate the NYSE's trading floor operations from five rooms to four over the next 18 months.

Reductions in trading space, which affect specialists and floor brokers, comes at a time when the NYSE is able to handle increasing order volume faster and more efficiently due to improvements in automation and technology, stated Nelson Chai, CFO and EVP of NYSE Group, in last week's announcement.

Meanwhile, the NYSE is also in the process of implementing the NYSE Hybrid Market to comply with the SEC's Regulation NMS. There is speculation over the role that floor brokers will play once that system is fully implemented, and, therefore, the exchange may need less floor space going forward as more of the order flow is executed electronically.

Already there are signs that more of the NYSE's volume is gravitating toward automated execution. Based on initial results through Oct.30, when 109 NYSE-listed stocks were trading in the Hybrid Market, 91 percent of trades were auto-executed, up from 18.5 percent pre-Hybrid. NYSE Group announced these results on Nov. 2 when CFO Chai, speaking at a Keefe, Bruyette & Woods Securities Brokeage Conference, said the Hybrid Market performance and execution quality were very positive. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio