Traders brace for another day of closed markets as Sandy menaces

Mon Oct 29, 2012 11:20am EDT
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By Rick Rothacker

(Reuters) - Wall Street traders are preparing for the possibility of another day of closed financial markets on Tuesday after Hurricane Sandy, the monster storm menacing the Northeast, led to the first weather-related shutdown of U.S. stock markets in 27 years.

Market participants and regulators decided late on Sunday to shut the market, reversing an earlier plan to keep electronic trading going on Monday and leaving some complaining about the late decision.

Bond markets, which are closing at noon EDT (1600 GMT) on Monday, will not reopen on Tuesday, a trade group said.

"It doesn't make sense to put people in harm's way or to only have half a market," said Nicholas Colas, chief market strategist at ConvergEx Group in New York. "If just the electronic market was open, that wouldn't provide enough interest, with everything else still closed."

The decision to close stock and options markets came after regulators, exchanges, and dealers discussed the unknowns that would have been tested if the markets opened on Monday, three sources familiar with the situation said.

After a mass transit shutdown in New York, Wall Street had still prepared to open for business with limited staffing by booking hotel rooms for key employees and leaning on offices in other cities.

The Securities Industry and Financial Markets Association, a Wall Street trade group, held a conference call around 11 p.m. on Sunday to debate whether to close, said a brokerage executive who requested anonymity because he is not allowed to speak to the media.

"It was like trying to corral cats," the executive said. "There were a lot of questions because so many things could be affected by this."   Continued...