Yes, this will be a biased view.
In the mid-1990’s we spent time, energy and money building the NYSE into one of the great brands in the world.
The result was an 83% market share, global dominance in the listings business, and the status – documented by independent research firms – of being one of the world’s most respected brands, and the global leader in equities trading.
That position was built on a platform of transparency. In 1995 we brought television to the floor of the NYSE and for the first time in the Exchange’s history allowed reporters to regularly report from and spend time on the floor with traders. The members were reluctant at first, but soon realized the openness and transparency was good for the market. Dick Grasso would remind us regularly that if we served the least sophisticated investor with care, everyone along the food chain would benefit…and he was right. That strategy led to the greatest years in the history of the NYSE.
In June of 2001, a failed software upgrade caused a two-hour plus delay in the opening of the market. Dick and I held briefings – on the floor – every 15 minutes for the reporters based there…and that number swelled quickly as we delayed our opening. Dick took full blame for the delay. “This is our fault,” he said, explaining that a software upgrade the night before had failed, and we were late in detecting the issue. By the time we could revert to the previous installation, we were forced to delay the opening more than two hours. We provided regular updates on our investigation, progress and anticipated opening time.
We all know systems can fail occasionally. Machines break. We lose power. We all get that.
But what some managers still don’t understand is the need for openness…transparency…and regular “plain English” communications. Several commentators mentioned that about yesterday’s events, from Rudy Giuliani…to Joe Grano this morning on Maria Bartiromo’s show: http://video.foxbusiness.com/v/4345779516001/improving-the-strategy-against-cyber-attacks/.
That, in my estimation, was the NYSE’s mistake yesterday. It wasn’t the software glitch. It was the silence that resonated from a nearly empty trading floor.
That market that had an 83% market share, now has a market share of less than 20% on most days.
The few traders still there tell me regularly that had we not brought television to the floor in the 90’s…there would be no trading floor today. The platform we created for listed company visibility remains a major selling point for the NYSE in the battle for listings.
The post-Grasso leadership at the Exchange has de-emphasized quality of execution and concern for the least sophisticated investor to focus on speed. Dick would always remind market participants that the most important thing they could provide their customers was a quality, fair, best execution. John Thain as CEO said the most important thing was speed of execution. That change in philosophy started the spiral the Exchange has yet to halt.
In the 90’s, we were fortunate at the NYSE to have assembled an outstanding team – from leadership, to technology, to my communications and marketing partners. Through downsizing, changes in ownership, and changes in philosophy, very few remain. That was evident yesterday unfortunately.
The best “new” management teams learn from their predecessors. They credit their predecessors for the positives they’ve inherited, and they learn from the issues their predecessors faced.
The playbook was there at 11 Wall. Unfortunately, it was never opened.
There will be more software glitches at the Exchange. They just happen. I’m hopeful the next one will be handled in a way that minimizes investor concerns, and allows the current management team to excel.
Post by Bob Zito on 7/9/2015