Wall Street is set for a historic second day of weather-related shutdown as Hurricane Sandy sweeps up the East Coast, the biggest unscheduled market disruption since 9/11.
The New York Stock Exchange and Nasdaq will remain closed on Tuesday amid a storm that is expected to cause between $10-billion to $20-billion in damages, marking the first time since 1888 that the markets have remained closed for two days due to weather.
Exchange operators and the U.S. Securities and Exchange Commission cited employee safety and market fairness, as the city shut down train and subway service and bridges and tunnels were closed, making it difficult if not impossible for tens of thousands of employees to get to work.
Wall Street firms such as Goldman Sachs stacked sandbags outside their offices to guard against flooding, and told employees to do their work at home. Many companies elected to postpone their quarterly earning reports for more favourable market conditions.
“Most U.S. trading desks were open but operating with less staff than usual,” said Win Thin, a strategist with Brown Brothers Harriman who worked from home on Monday. Steve Gerbel, who runs hedge fund Chicago Capital Management, said that, when he called a Goldman trading desk on Monday, he got to talk to employees from its Salt Lake City office for the first time.
Since markets were closed, Mr. Gerbel said he would spend most of the day dealing with paperwork that he typically put on the back burner, and that his employees would do the same, or clock out early.
On Bay Street in Toronto, many of the big banks said they have plans in place to handle any market disruptions should Tuesday be more than just wet. The storm was expected to hit Toronto overnight.
A spokeswoman for the operator of the Toronto Stock Exchange said the country’s biggest market is expected to be running as usual on Tuesday, and had a plan in place should the storm threaten its operations.
Carolyn Quick, TMX Group director of communications, said “our markets absolutely have robust disaster and business continuity plans in the event of severe weather and other market disruptions. However, we expect to be operating normally this week.” The U.S. closings are being treated the same as U.S. Thanksgiving would be. As such, no specific preparations were being made as of Monday afternoon.
Canadian Imperial Bank of Commerce said that while its trading floor in New York stayed open Monday morning, the bank was swiftly transitioning business activities to other offices in Toronto, Calgary and London.
Bank of Nova Scotia has already put its “business continuity plan” into action in New York. Most are home, but for the staff that do need to be in the office, the bank has reserved hotel rooms nearby. Scotiabank is no stranger to natural disasters – the bank endured flooding off the coast of Mexico this past summer, and the bank’s Emergency Management Team has also overseen damage control through serious flood situations in Thailand.
Bank of Montreal said it has flooding, power outage and transit interruption plans in place if the storm hits hard, and it will encourage employees in non-essential roles to work from home.
The Canadian ETF Association sent a warning out to investors to use caution when trading and expect wider bid/ask spreads than normal. “We wanted to remind investors that many of the ETFs that can be traded today in the Canadian market have exposure to U.S. securities,” said Pat Dunwoody, the executive director of CETFA. She noted that the true value of an ETF can be difficult to know with the U.S. markets closed, and so the price some investors will pay for these ETFs may not reflect what they’re worth. But this would be true on other days when the Canadian markets are open, but the ones south of the border remain closed.
Royal Bank of Canada issued a trading notice that due to the storm, all U.S. day orders submitted on the weekend, Monday and Tuesday would be ordered when the markets reopen, presumably on Wednesday.
In New York, meanwhile, Neil Bansal, an associate at a private equity firm, did not appear worried. He spent part of the day wandering along the largely deserted streets with his roommate, who also had a day off. “We tried to find an open bar, but it is a ghost town,” Mr. Bansal said.