--NYSE alert says Twitter, Facebook could be used to communicate
end-of-day order imbalances-
--Exchange operator would use social media as backstop should
email alerts fail
--Announcement follows a technical glitch Friday that delayed
two email alerts
By Matt Jarzemsky and Chris Dieterich
NEW YORK--If all else fails, tweet it.
The New York Stock Exchange said Thursday it is looking to
social media as it tweaks procedures for finding buyers and sellers
to close daily trading in certain stocks.
The exchange, a unit of NYSE Euronext (NYX), said Thursday it
will use Twitter and Facebook in its hunt for investors to set
closing stock prices when the existing method of spreading the
word, email, fails. The move brings the old-school exchange--one of
the last bastions of in-the-flesh, open-outcry stock trading--one
step further into the digital world.
Thursday's announcement came after a technical glitch Friday.
After the closing bell, an email notification meant to alert
investors to a stock with an outsize number of unfilled buy orders
was delayed by seven minutes.
A big mismatch of those types of "buy" versus "sell" orders at
the close could cause a stock to jerk higher or lower than its
final trading level. To prevent that price disruption, members of
the exchange can invoke a rule giving extra time to smooth out the
imbalance.
A separate alert sent to traders Thursday morning said that if
email alerts fail again, the exchange would solicit orders to help
address buy and sell imbalances using the social-media distribution
channels. The note didn't specify a date for when the new policy
would be implemented, and a spokesman for the NYSE declined to
offer a timetable.
The measured embrace of social-media platforms comes as many
investors increasingly incorporate them into their daily news
diets.
"I've been using Twitter for about 18 months at this point,"
said Dave Lutz, a Baltimore-based managing director at Stifel
Financial Corp.'s (SF) brokerage and investment-banking arm. "We
noticed that [bond investor] Bill Gross and other people would be
tweeting things out. A lot of investors are starting to rely more
and more on Twitter as a valid news resource, just because you have
so many global newspapers and pundits. It's a perfect aggregator of
information."
But at least one trader remains comfortable using her feet, or
the phone, to get information about what is going on with certain
stocks.
Doreen Mogavero, chief executive of brokerage Mogavero, Lee
& Co., who sits on the NYSE floor, said she noticed an unfilled
order for the stock in question at Friday's close and merely walked
over to the market-maker post to learn of the imbalance.
"I found out what it was and called the client," she said. "I
wouldn't even think to look at Twitter."
On Friday, the imbalanced stock in question was
oil-field-services company Weatherford International Ltd. (WFT),
which had orders to buy 2.9 million more shares than were on offer
to sell. The exchange moved to allow 30 extra minutes for brokers
and institutional investors to smooth out the imbalance by selling
Weatherford shares.
The NYSE sent two alerts about the closing procedure for
Weatherford on Friday that left its system seven minutes late "due
to delays in the web and email systems," the exchange said in the
note Thursday. The exchange extended by five minutes the time for
order submissions to offset the imbalance, and Weatherford's stock
closed at a price of $13.54, unchanged from the day's last trade
during the normal session.
Write to Matt Jarzemsky at matt.jarzemsky@dowjones.com and Chris
Dieterich at christopher.dieterich@dowjones.com