NYSE would ring the bell for Aramco with pleasure

Traders on the floor of the New York Stock Exchange, a potential venue for the planned IPO of Saudi Aramco. Unlike other exchanges where business has moved exclusively online, there is still a big physical trader presence on the NYSE floor. (AFP)
Updated 13 October 2017
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NYSE would ring the bell for Aramco with pleasure

DUBAI: The market maker on the floor of the New York Stock Exchange has been in his job for 25 years, and has seen it all: Market crashes, financial crises and corporate scandals.
He was at his post on Sept. 11 2011 when terrorists flew planes into the twin towers of the nearby World Trade Center, part of a co-ordinated assault on the US that killed nearly 3,000 people that day. “That was a bad day. All of us here were lucky to get away, but the NYSE is a tough institution,” he said.
The NYSE, the biggest stock market in the world with $21 trillion of stocks on its Big Board, regularly witnesses contrasting scenes of euphoria and tragedy. Last month it saw a string of foreign companies coming to market in initial public offerings (IPOs).
In one week alone, it listed Best Inc., a Chinese logistics company backed by the e-commerce giant Alibaba, valuing it at $4 billion. The following day, the bell rang for Despegar, an Argentinian online travel company, with a price tag of $2 billion.
The jubilation was plain to see for the founding executives of Despegar as they celebrated from the balcony of the exchange when trading in their stock opened. They had successfully got their company listed on the world’s most powerful stock exchange, and had made millions of dollars in the process.
If Saudi Aramco, the Kingdom’s oil giant, were to choose NYSE for its planned IPO, it would dwarf either of those. Indeed, with potentially $100 billion of shares up for sale, it would make even the biggest IPO in history — the $25 billion raised by Alibaba in 2014 — seem relatively small.
What would the market maker, a native of New York City, think about Aramco listing on his beloved exchange? “We know they are the biggest oil company in the world, so it would be great if they came to NYSE. The exchange is all about doing business, and that’s what Aramco would bring for us,” he said.
Market people have been doing business on the site in lower Manhattan since 1792, but the NYSE was formally constituted in 1817 at the height of the Napoleonic wars in Europe. Crashes and panics came and went with predictable regularity as the era of ticker tape gave way to computers and online trading.
Since 2005, the number of physical traders on the floor has dwindled, as has the brokerages they represented. Back then, there were about 2,000 brokers serving investors, now there are about 700.
Rather than open outcry at trading pits, the floor of the exchange is now dominated by hi-tech booths, served by traders equipped with electronic tablets to record trades and deals. “I’m one of the few humans left here,” the market maker quipped.
But, unlike other exchanges where business has moved exclusively online, there is still a big physical trader presence on the NYSE floor. The market maker’s job is to ensure orderly trade even in volatile times — such as the first day’s trading of an IPO — by smoothing out demand and supply for stock with which the market may be unfamiliar.
“There is a human element in the NYSE you don’t get elsewhere. If we cannot judge the price of a stock on opening, we are not in a rush to open it. We want to get it right to ensure a proper market,” the market maker said.
His services were required the day of the Despegar IPO, when trading was delayed 30 minutes beyond the bell to ensure a stable opening. “We have a responsibility to ensure orderly and liquid markets,” he said.
Little throws him out, it seems. As we talked, the screen behind him flashed up the headline “Dow Jones hits new record high,” meaning another peak reached in booming US equity markets.
“That’s nothing, we see it every day,” he said.


Goldman Sachs’ second quarter profit up 44 pct; CEO Blankfein to retire

Updated 33 min 13 sec ago
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Goldman Sachs’ second quarter profit up 44 pct; CEO Blankfein to retire

  • The New York-based bank said Tuesday that earnings reached $2.35 billion in the second quarter
  • Nearly all of Goldman’s businesses saw double-digit growth in the second quarter

NEW YORK: Goldman Sachs’ profits jumped 44 percent in the second quarter compared with a year ago, driven by the investment bank’s core franchises: advising companies on mergers, acquisitions and other deals, and its trading business.
The New York-based bank said Tuesday that earnings reached $2.35 billion in the second quarter, compared with $1.63 billion a year earlier. On a per-share basis, Goldman earned $5.98 a share, compared with $3.95 a share a year earlier, beating analysts’ forecasts of $4.65 a share.
Separately, Goldman said Chief Executive Officer Lloyd Blankfein will retire as of Oct. 1, and be replaced by David Solomon, the president and chief operating officer. Blankfein has been CEO since 2006.
Nearly all of Goldman’s businesses saw double-digit growth in the second quarter. Trading was particularly strong. Goldman’s institutional client services division, which contains the firm’s trading operations, posted net revenues of $3.57 billion in the quarter, up 17 percent from a year earlier.
Goldman’s trading performance can be fickle, driven by whether the market was volatile that quarter and whether the right sort of securities saw the right sort of movement. Like its competitor Morgan Stanley, which will report results Wednesday, Goldman has been looking to diversify its businesses, moving in recent years into consumer lending and consumer banking.
Goldman’s investment banking business also had a solid quarter, posting net revenues of $2.05 billion, which is up 18 percent from a year earlier. The firm saw both higher underwriting revenue, as well as revenue for advisory services.
The firm’s return on equity ratio, a closely watched performance gauge for banks like Goldman Sachs which measures how much money the bank earned with the money investors have lent it, was 12.8 percent in the quarter. Banks like Goldman try to keep that figure above 10 percent.
Company-wide net revenues were $9.4 billion in the quarter, also beating analysts’ expectations.
Goldman shares fell 0.8 percent to $229.25 in premarket trading.