The U.S. securities industry canceled all equity trading today and will shut bond markets early, moving to protect workers as Hurricane Sandy barreled toward New York City with 85-mile-per-hour winds and the threat of an 10-foot sea surge.
The stock-market shutdown, announced by the Securities and Exchange Commission, may extend through tomorrow. CME Group Inc. said it will close interest-rate trading at noon New York time, in line with with the bond-industry group’s recommendation. Risks posed by the storm, expected to come ashore late today in southern New Jersey and potentially affect 60 million people, were deemed too great to require workers to travel.
“It was a judgment decision based on the safety of a lot of market participants, especially as the storm seems to be getting more severe,” said Larry Leibowitz, chief operating officer of NYSE Euronext, in a phone interview. “Given all the emphasis on stability and investor confidence, operating the market that way didn’t seem to serve the public interest. Why do this? To prove we can? That didn’t seem to make a lot of sense.”
Trading in U.S. equity-index futures ended at 9:15 a.m. New York time today, CME Group Inc. said in a statement. The Securities Industry and Financial Markets Association recommended trading in dollar-denominated fixed-income securities end at noon. Futures on the Standard & Poor’s 500 Index closed down 0.4 percent at 1,402.4 after sliding as much as 0.8 percent during the session.
CME said in a statement it will accept credit default swap deals until the regular acceptance time of 7:00 p.m. New York time, with settlement curves calculated at noon. For interest rate swaps, CME Group will accept deals up until regular acceptance time of 7:00 p.m. New York time. Non-dollar settlement curves will be derived at their normal times, the derivatives exchange said.
Exchanges from the NYSE and Nasdaq Stock Market to those run by Direct Edge Holdings LLC in Jersey City, New Jersey, and Bats Global Markets Inc. in Lenexa, Kansas, suspended operations. U.S. equity trading is spread across 13 exchanges and dozens of private venues run by brokerages.