For New Yorkers who don’t work in the financial industry, the Wall Street area doesn’t offer much. There’s Bowling Green, the city’s oldest park, and Fraunces Tavern, a three-centuries-old bar most famous for being the places George Washington said farewell to his troops after the Revolutionary War. Little else springs to mind. Visitors to the city, however, feel differently. The Georgian facades attract droves of tourists — bull ball-rubbers all — armed with cameras and selfie sticks. The building they come to see, the 198-year-old mother of all synecdoches, is the New York Stock Exchange. Called “The Big Board” by people who want to seem in-the-know, this is the world’s largest stock exchange, and it’s closed to visitors — for the moment.
The market’s turbulent summer hasn’t dissuaded visitors from making capitalism’s version of Hajj. Ask people why they’ve come, and the answers skew cheery and tautological.
“Well, it’s Wall Street,” a middle-aged woman from Oklahoma explains. “This is where all the money happens.”
A family from Korea getting pictures taken in front of the NYSE building explained that the NYSE is famous, and that’s why they wanted to come see it. Did they know what happened inside? “It’s a famous building,” they said.
They were right in one sense — it attracts a lot of tour groups from high schools and China — but apparently deeply uninterested in the physicality of the thing. It’s easy to conflate the ideas of “Wall Street” and “The Stock Exchange” and even “The Economy,” but the first two are places, and the third is a shifting reality. People don’t talk about the building or what happens inside. They talk about money, which is another thing altogether.
The four-hour blackout of the floor in July demonstrates the disconnect. The Dow drooped 261 points by the end of the day, primarily because of fears about China’s stock woes and the state of negotiations around Greece’s debt troubles. The “internal technical issue” that triggered a temporary shutdown of the NYSE floor didn’t help — but neither did it really hurt. Investors could still trade, just not on the NYSE. During the sort of event that might’ve wounded them in another era, “The Economy” and “Wall Street” were just fine.
Yet the NYSE remains a totemic power in the public imagination. For a century and a half, what happened in Lower Manhattan had ripple effects. It still does, but people are considerably more wary of what those might be and the idea that people come here to commune with the idea of constant commerce and plenty, no longer holds the attention of a growing part of the population.
The New York Stock Exchange is getting older and less important. Its significance is very much up for debate and, on second glance, may have very little to do with money at all.
Decades ago, in the first half the 20th century, the NYSE was one of the most prestigious financial institutions in the world — let alone on Wall Street. “It was the main platform for trading,” says New York University finance professor Menachem Brenner, who once worked as a floor trader at the New York Stock Exchange. “It once handled more than 80 percent of trading.”
As the years went on, and the age of digital transactions and electronic trading took over, the role of the NYSE has been severely diminished. Nowadays, the NYSE handles only about 12 to 13 percent of trading. “There’s a lot more competition out there,” Brenner says. Still, 12 percent ain’t pocket change. As of June 2015, the market capitalization of the NYSE — that is, the value of all of the shares moving through the exchange — was more than $19 trillion, with 2,464 companies listed. The average daily trading value in 2013 was $169 billion.
One of the consequences of more competition is that the NYSE can no longer always offer the best possible price for a trade. Brenner points to the “Regulation NMS,” a rule by the U.S. Securities and Exchange Commission that says any order for a trade must be executed at the best price — no matter where that is. If a different venue can offer a better price, that’s where the trade will be conducted, and the buyer doesn’t even have to know.
The Regulation NMS is part of the reason the exchange isn’t even very profitable. The exchange is, after all, a platform and its takings aren’t much to consider: one-300th of a penny for every transaction, while trade volume continues to fall. The NYSE’s new management is actually pouring in more money to renovate the place and overhaul how business is done. The owners claim they won’t let the tourists in to turn a buck, even though that’s precisely what they did before 9/11. Many of the renovations might be part of a larger plan to bring tourism back to the floor.
And what would tourists inside the exchange be looking at? “An elaborate backdrop for the cable-TV business programs at CNBC and Fox,” financial journalist William D. Cohen wrote in the New York Times. The men and women running around, ostensibly to facilitate important things, is nothing more than “an elaborate charade,” he wrote.
The truth is, what happens on the 11 Wall Street trading floor could be accomplished by a computer in the middle of a cornfield.
“Eventually, floor trading is going to disappear,” says Brenner. “Around the rest of the world, it already has. It doesn’t really mean anything. It’s inertia.” Brenner thinks what will happen with the NYSE will be similar to what is happening in Chicago right now, where floor trading in places like the Chicago Board of Trade is vanishing.
When asked about the status of the NYSE among the rest of the financial community, Brenner acknowledged that companies still enjoyed the pomp and circumstance that came with putting an initial public offering on the floor, and ringing that bell. “But for the trading community,” he says, “it doesn’t really hold a special place anymore.”
Earlier in the year, Brenner visited Shanghai’s Financial Futures Exchange. “There’s no floor,” he says. “You go and visit, and all you see is screens. That’s it — that’s the future. We go with the times.”
But that’s troublesome for TV news anchors, who have to stand somewhere, and for people who want to know where their money went. The newly insolvent aren’t always happy to deal in abstractions.
Some of the reasons for the exchange’s continued existence are fundamentally practical. Neil Fligstein at the University of California, Berkeley, has spent a lot of time researching economic sociology. “There are real reasons why these financial conglomerates, like Wall Street, exist,” he says. “Getting someone on the phone or a Skype call isn’t the same as getting someone to meet you in your office.” To Fligstein, Wall Street isn’t really different from any other industrial district that establishes itself in a major city, and the NYSE is a public space at its core.
Other reasons are abstract, squeezed out of unnerving questions like, “What would happen to the market if there stopped being an actual market?”
John Grable, who teaches financial planning at the University of Georgia and who co-founded the Financial Therapy Association, grapples with these sorts of issues. Over several studies in the past few years, Grable and a few colleagues have examined the effects of financial news and media on potential investors and consumers, across different demographics. While Grable and co. didn’t specifically study media portrayals of Wall Street and the NYSE, they observed an interesting gap. “In smaller towns and cities, America’s financial world — Wall Street — is still a powerful symbol of the markets,” says Grable. “It’s still something people refer to. But in larger cities and metropolitan areas — particularly with more younger people — much less so.”
Basically, the media play up Wall Street as a symbol of America’s economic might for a particular audience — older white men who don’t live next to a major financial hub. When you see Fox Business and CNBC reporting from the NYSE floor, you’re seeing an abstraction made literal for the benefit of an older generation.
The trading floor is just a stage that acts as a loud, animated backdrop for the cable news networks reporting on the day’s business. Players enter, throw their hands up and down and yell for a bit sometimes, and then leave. The chromatic blue glow from the monitors plastered everywhere provide the perfect lighting. Audience’s at home sit glued to the TV and think they’re watching where “the money gets made.” It’s capitalism’s equivalent of the SportsCenter set.
In contrast, younger generations are choosing instead to give Wall Street the middle finger and take their money elsewhere. And this makes perfect sense. Millennials grew up under the Great Recession. They saw firsthand what happens when the financial world operates like a doomsday machine, whose only purpose is to churn and make more money. It’s a culture that refuses to be purged from lower Manhattan.
The symbolic theatrics of the NYSE’s trading floor perpetuate that culture. That image of capital being kneaded by human hands is a psychological crutch for financial elites and ordinary citizens alike. For others, the Big Board stands for social and economic inequality. When the exchange and other buildings like it disappear, those frustrations will find other venues for protest — maybe Washington, maybe coordinated online action. Certainly Occupy Wall Street would have been something else without a Wall Street — a physical place — to hold people’s pissed off, physical forms.
Brenner, Grable, and others remain unconvinced the daily school play that is the trading floor will be enough to keep the exchange on Wall Street. “The NYSE is a facade,” says Grable. “Almost 80 percent of what it does has been outsourced to other places. There are few traders there. Some of the fastest growing firms are based elsewhere. This is all for TV. The NYSE is already gone.”