Capital Markets

PHLX to Close Trading Floor

''It's very clear that the new Reg NMS favors electronic environments,'' says one observer.
Stephen TaubJanuary 9, 2006

It’s the end of an era for The Philadelphia Stock Exchange, the oldest exchange in the United States.

Founded in 1790, the exchange will closing its trading floor and become a fully electronic operation. According to a statement, the move is intended to comply with Regulation National Market Structure. In simplest form, the relevant part of Reg NMS requires that all investor trades be executed at the best price, even if stock markets must fill the order through a competitor.

“We are confident that most of our members will be able to make the transition and be able to conduct their business electronically,” added the exchange.

The PHLX, as it is also known today, trades 2,000 stocks, more than 1,926 equity options, index options for 25 sectors, and currency options and futures. Unlike the New York Stock Exchange, it has chosen not to go the hybrid route and offer both electronic and floor-based trading.

“It’s very clear that the new Reg NMS favors electronic environments,” Benn Steil, a senior fellow at the Council on Foreign Relations, told Bloomberg. He added he expects other trading floors to close down later this year because of the rule.

The wire service noted that this is the first closing of an exchange’s trading floor since March 2002, when the Pacific Stock Exchange shut down its operation.