2nd UPDATE: Traders, Electronic Systems Tested By Tuesday's Quake
August 23 2011 - 5:24PM
Dow Jones News
Exchanges' trading operations and electronic market systems
stood firm through a 5.8 earthquake that struck Virginia early
Tuesday afternoon, according to officials.
Some traders evacuated from exchange floors and offices, but
infrastructure supporting a network of automated trading continued
without a hitch following the strongest quake to hit the state in
more than 100 years, according to the U.S. Geological Survey.
U.S. stocks briefly retreated after the quake shook the
Washington, D.C., area and sent out tremors felt in New York and
Detroit, but prices quickly rebounded. Oil and other industrial
commodities briefly dipped while gold, already settled for the day,
headed lower.
"It started rumbling and everyone looked around at each other,"
said Joseph Mazzella, managing director for equities trading at
Knight Capital Group (KCG) in Jersey City, N.J. "We ran a
diagnostic [on trading systems] behind the scenes but you didn't
see even a blink on your screen."
Representatives for NYSE Euronext (NYX), Nasdaq OMX Group Inc.
(NDAQ), BATS Global Markets, Direct Edge and the International
Securities Exchange said that dealing in securities and stock
options continued unabated following the earthquake.
The New York Stock Exchange's downtown New York trading floor
wasn't evacuated, nor was Nasdaq's Philadelphia options-trading
floor.
"It felt like there was a subway train going underneath the
building," said Jonathan Corpina, senior managing partner of
Meridian Equity Partners, a broker on the NYSE floor. Within 20
seconds it was "business as usual" again, he said.
Some traders departed the New York Mercantile Exchange floor,
though no official evacuation was ordered. IntercontinentalExchange
Inc. (ICE) did evacuate its New York floors where options on cotton
and the U.S. dollar index are traded, and Direct Edge evacuated
non-essential staff from its Jersey City headquarters.
The quake tested the high-tech infrastructure supporting stock
and derivatives markets that are now heavily electronic. New
York-area data centers run by NYSE Euronext and specialist firms
such as Equinix Inc. (EQIX) and Telx Group Inc. saw no hitches
affecting the trades and messages among exchanges, brokers and
proprietary trading firms.
Spread Networks, which runs a high-speed fiber corridor between
the New York and Chicago financial hubs, said its connections were
unaffected by the temblor.
Facilities housing exchanges' matching engines and the servers
used by traders to send orders into the market are built to
withstand catastrophes such as earthquakes, fires, floods and
lengthy power outages. NYSE Euronext over the past two years has
spent about $500 million constructing facilities in New Jersey and
the United Kingdom, with backup generators ensuring power continues
to flow in the event of a blackout.
"The bones of the building need to be extremely durable for our
purposes," said Michael Terlizzi, executive vice president of
engineering and construction for Telx, who said he couldn't feel
the quake from inside the company's facility on 8th Avenue in
Manhattan.
Telx, which houses exchanges and telecom companies in its data
centers, looks to repurpose buildings originally constructed to
house heavy industry like printing presses, according to Terlizzi.
"Right after power and fiber concentration, what we look for in a
particular property are its structural attributes," he said.
Representatives for Citigroup Inc. (C) and J.P. Morgan Chase
& Co. (JPM) said their trading operations were operating as
normal and there were no major disruptions. J.P. Morgan said it
allowed employees to leave its New York buildings voluntarily, but
there were no forced evacuations and operations continued as
normal.
The U.S. Geological Survey rated the earthquake at 5.8 late
Tuesday afternoon, after revising it downward from earlier
estimates.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com
--Steve Russolillo, David Benoit and Daniel Strumpf contributed
to this article.
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