By Svea Herbst-Bayliss, Reuters/Daily Times (Pakistan)
14 May 2005
NEW YORK: US stock exchanges have invested heavily in preparing for catastrophic events since the 9/11 attacks and efforts to upgrade computer and communications systems are especially important now that more buying and selling is expected to occur on virtual exchanges.
Since the attacks on Sept. 11, 2001, shut down most US stock trading for four days, the biggest US exchanges have spent millions expanding their computer architecture, readying backup sites far away from financial centers, and training staff so trading won’t be crippled again.
For top executives at the New York Stock Exchange, Nasdaq Stock Market and other exchanges and trading platforms, the fear of another attack like the one that killed thousands in New York’s financial district causes insomnia.
“The things that keep me awake at night are thinking about some kind of catastrophe,” said David Krell, president of the International Securities Exchange, at the Reuters Exchanges and Trading Summit this week.
Since the attacks, the emphasis in stock trading has shifted more to electronic order processing and last month the New York Stock Exchange announced plans to acquire electronic-trading firm Archipelago Holdings Inc..
These kind of systems could be more vulnerable to hackers, power outages and another attack and to protect against that companies have taken a number of precautions. They are now connected through intermarket systems which make sure that flows can come to another site if one center should face trouble, leading industry executives told Reuters.
They have also put disaster recovery sites into towns where no one would suspect them, trained employees better and ringed recognizable buildings with guards to better deal with any future event.
Nasdaq, for example, can run its exchange from centers in Connecticut and Maryland, far away from Manhattan and nearby locations long favored as backup centers.
“To have those centers in Brooklyn or New Jersey would be a strategic blunder now,” said Chris Concannon, the exchange’s executive vice president for transaction services.
Some companies still like New Jersey but they are taking extra precautions by not saying where exactly their backup centers are located.
“Our employees who work there know, our customers who are physically hosted there know, and our vendors know where it is, but to everyone else the site just looks like another office building somewhere in New Jersey,” said Steve Rubinow, chief technology officer of Archipelago Holdings Inc., the Chicago-based operator of the all-electronic ArcaEx stock market scheduled to merge with NYSE.
Archipelago has spent millions of dollars on upgrades since 9/11, Rubinow said in a separate telephone interview, declining to give an exact figure.
“We have thought about a lot of scenarios including what would happen if an asteroid hit Chicago,” he explained, adding the exchange now has enough capacity to support stocks trading even if all other exchanges are incapacitated.
Exchanges are also working with federal regulators and among themselves to practice protecting US stock markets.
“People are much better prepared now than they were then and technology has come a long way,” Concannon said.
While the computer systems can be housed in anonymous office complexes, the 212-year old Big Board, located in New York’s historic financial district, has long been a recognizable icon of capitalism.
“The New York Stock Exchange has spent a lot of time learning from the events of 9/11,” said New York Stock Exchange chief executive officer John Thain.
Streets around the massive building that house the exchange just off Wall Street are patrolled day and night by New York City police officers and special heavily armed anti-terror units called Hercules teams.
Inside, Thain said the exchange now relies on a communications system that “can tolerate multiple faults across the system,” adding: “That’s a big change from 9/11.” reuters