flash crash

A day in the quiet life of a NYSE floor trader

May 29, 2013: 10:15 AM ET

It ain't what it used to be, says floor trader Kenny Polcari: "technology everywhere" but "a computer doesn't get it."

By D.M. Levine


Floor trader Kenny Polcari. His workday is pretty tame these days.

An earlier version of this post appeared with errors introduced in the editing process. It has been updated and corrected throughout.

FORTUNE -- Kenny Polcari is walking across the floor of the New York Stock Exchange, reminiscing about the good old days. A floor trader with O'Neil Securities, when he first came here, he says, "there were phones, no screens ... and I had a buy pad, a sell pad, a cancellation pad" where he wrote down stock orders. "That's all -- there was no technology."

Times change, and today the trading floor is littered with flat screens. Everything is automated, and the workplace Polcari has known for the better part of three decades is much tamer. At first gradually and then all of a sudden, computers came to dominate his world, and much of what Polcari and the other institutional equity brokers did in person on the floor of the exchange has moved onto computer servers across the Hudson River in New Jersey. And now the Big Board has a new boss: IntercontinentalExchange, a company based in Atlanta.

Polcari is tall and husky with immaculately-cropped salt and pepper hair. The day we met, he wore a blue jacket with his name etched in white lettering across the right breast pocket. He talks close and fast, all hands all the time. He is a floor trader, whose job it is to offer some of the myriad buy and sell orders -- liquidity -- that grease the gears of the exchanges, and keep global market capitalism humming.

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When Polcari started in 1980, he was hooked by the "sheer excitement" of the place, he says. There were 5,500 people working on the floor of the exchange; a lot of whom were boisterous types, just like him. "It was the central marketplace ... Everything that traded ended up here," and everything Polcari did was personal. This meant that between the start of trading at 9:30 and the closing bell at 4:00, the floor was a merciless scrum of boisterous hagglers jammed into four trading rooms, all all looking for a competitive edge through sheer force of gesticulation. "The customer would call me, and I would literally have to walk out into the crowd where the stock traded. That's where everyone that wanted to buy or sell that stock at any given moment in time would be, so when you walked into the crowd you could assess supply and demand, you could see it."

Out on the floor, among the hordes of buyers and sellers, Polcari says he could feel out the market in a very real, immediate way, talking at fellow traders and getting "information that I could then use to help me figure out how I'm going to execute the order. How aggressive or not I'm going to be."

Today, the number of traders on the ground at the NYSE (NYX) has dwindled to 700, occupying three rooms instead of five. While negotiation still happens every day on the floor -- especially for small-cap stocks that aren't likely to see an abundance of interest in the general investor pool -- even Polcari executes his trades electronically now (on a handheld device that looks something like a souped-up iPad), contributing to an atmosphere that's placid by comparison -- closer to a library than a cattle auction.

The near-sound-stage silence has proven ideal for cable television networks like CNBC and Bloomberg to set up permanent broadcasting outposts right on the floor (Polcari is himself a mainstay of the cable news commentary circuit, and networks often turn to him for live commentary from the trading floor). "Today, there's still a lot going on, but it's kind of quiet because it all happens electronically," he says, rather wistfully.

Polcari still likes his job, and when you get him talking about the markets, he can work himself into an arm-flailing tizzy. He remains a staunch defender of his craft, firm in his belief that the move away from humans has very real negative implications for how the markets operate on a day-to-day basis. "When you walked into the crowd there was a real art to understanding what the crowd was doing, what your customer wanted to do, how the stock traded. You had to really know that, it's not something you could program a computer to do," he says. Computers, he says, are bad at what he's best at: the very human art of feeling out the crowd and using experience and reason to intuit what's motivating the price of a stock to go up or down.

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In this age of near-monthly flash crashes --many exacerbated by the knee-jerk responses of mindless automatic trading algorithms -- Polcari argues that his human judgement is especially important. If some financial HAL (like the computer in "2001: A Space Odyssey") places an order, or a thousand orders, by mistake, the market needs people like Polcari  to shut it down before it turns to mayhem. "A computer doesn't get it. A computer will do what you tell it to do," he says, even if what you tell it to do is a mistake. "Which is exactly what happened with Knight. The computer did what it was told to do, but it was a mistake." If "you send us an order to buy, we'll execute it, but [if i think it's a mistake] I'm telling you this is wrong."

Stil, electronic trading accounts for 79% of stock trading volume in the U.S. Polcari is losing the battle. He seems resigned to the transformation. "I'm not saying I'm depressed about it. You change with the environment," he says, getting ready for a television interview from the floor of the exchange before heading home for the weekend. But, he says, all this change has eaten away at the old pit that so electrified him when he first got into the business -- an atmosphere that seemed like it was built just for people like him. "You talk to one of the younger kids today, who just came here two or three years ago, they don't understand." He added ""It's almost like technology destroyed the personality."

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