Wall Street Journal analysis and business reporting

¶ … Sandbags outside the NYSE (Strasburg, Cheng and Bunge)

Hurricane Sandy has been called by some as the worst storm to ever reach the U.S. mainland. In fact the NYSE has not been closed since a blizzard that occurred in 1888. However, for a second day in a row the NYSE has been shut down which highlights the stock exchanges disaster preparedness plan and its disaster capabilities. There has been some debate about whether or not to open the stock exchanges all electronic versions. Many investors worry that this trading format is too prone to errors based on complex algorithms and lacks human judgment to regulate the transactions.

The disagreement over whether or not to open this format was opposed by many of the large banks who feared volatility in the market. Volatility was not only feared because of the trade format, other events might influence market volatility as well. "You're compacting two major events, one -- the most important event of the year -- the election, and two, an employment number that a lot of people are looking at," said Andrew Brenner, head of international fixed income at National Alliance Securities. He added: "You're running the risk of some major asset price changes and very illiquid trading over the next week. People who want to get in or get out, they're not going to be able to get in and out (Strasburg, Cheng and Bunge)."

In the end the stock market leaders decided to close the trading floor because there did not seem to be enough trust in the backup system. There were cases of algorithms going awry earlier and many investors feared wild changes without human intervention to monitor this market. The hurricanes effects on the stock market are incredibly interest for a variety of reasons. For example, assuming the threats regarding extreme weather events and climate change are real, and then this situation could be a common occurrence in the future. To maintain the integrity of the stock exchange, a new backup plan or a new location may be necessary to ensure its future stability.