NYSE maps strategies to cope with terror attack

The New York Stock Exchange is preparing “contingency” plans to deal with the possibility of a terrorist attack on its Wall Street home, exchange Chairman Richard Grasso told a gathering of financial industry executives gathered in Boca Raton, Fla., Wednesday.

Among the options, Grasso said, are auxiliary locations across the Hudson River in New Jersey and shuttling some electronic trading functions to other exchanges in Europe, Asia and Latin America.

Grasso indicated the plans were a response to the six-day shutdown of the NYSE following the Sept. 11 attacks on the World Trade Center -- not to an imminent threat or a new warning of possible attacks.

“We must have a plan that can put us in a position where we can provide service again quickly,” he said. “We have to be in a position that no matter what kind of attack the markets will resume” within 48 hours.

Grasso said the exchange has scuttled plans to build a new 900-foot-tall skyscraper headquarters, as well as plans to sell NYSE shares to the public.

Grasso’s remarks were beamed live via satellite to the Securities Industry Association conference.

Unlike in previous years, the mood at this year’s meeting is a more somber one.

Some 1,200 employees of Wall Street firms were lost in the Sept. 11 attacks, including 800 people who worked for SIA member firms. The dead and missing were remembered in a moment of silence as their names were flashed on large screens at the start of Wednesday’s session.

In addition, a bear market has staggered the industry. Brokerages will raise a record $3.2 trillion for U.S. companies and entrepreneurs in 2001 but revenues from the trades will be down 20 percent to $197 billion. Pre-tax profits will plunge 47 percent to $11.2 billion. Close to 20,000 securities jobs have been eliminated this year.

Attendance at this year’s SIA meeting is down, and the conference room at the Boca Raton Resort & Club was just two-thirds full during Wednesday’s session.

American investors are reeling from a plummet in stock values in their 401(k) plans, personal accounts at brokerages and online portfolios. An SIA investor study shows that just 28 percent of those polled think 2002 will be either a “very good” or “good” year for the markets.

Still, SIA officials stressed that the industry’s perseverance after the devastating attacks deserves recognition.

“Unlike previous years, our pride is not in our numbers,” said SIA president Marc Lackritz. “Our pride is in our resilience, our tenacity and our focus and it serves as a reminder that the most important things in life can’t be measured.”

Others say they are still doing brisk business, however.

One attendee, Russell R. Wasendorf, chairman of Peregrine Financial Group Inc., said demand for futures trading at his firm has jumped 25 percent since Sept. 11. Wasendorf said investors are taking so-called long positions, meaning they are betting stock prices will go up.

“The numbers have jumped up spectacularly,” he said. “They are bullish about [the markets] coming out of this.”

Hardwick Simmons, CEO of the Nasdaq Stock Market, said the “equitization” of America, where more than 50 percent of the country is now invested in the stock markets, is a factor in the industry’s favor because those investors will ultimately ride out the tough times.

“I just don’t see that [trend] going backwards,” he said.

Others said they expect more bad economic news.

Jeffrey Applegate, chief investment strategist at Lehman Brothers, predicts the recession will deepen with a 3.5 percent loss in GDP this quarter, followed by a 1.5 percent drop in the first months of 2002.

Federal Reserve rate cutting and the economic stimulus package are among the factors that will spur a rebound by next summer, he said.