BY NICK ABADJIAN
It seems pretty routine . . . coffee in the morning and OJ in the afternoon. But it is anything but routine for the traders of the New York Board of Trade who used to trade these commodities four to five hours a day on a spacious Manhattan trading floor and are now doing one hour and half shifts in a cramped trading floor in Long Island City.
The New York Board of Trade’s (NYBOT) old trading floor was located ten feet from what used to be called Tower Two. When the second plane hit the Tower on Sept. 11, people in the exchange at 4 World Trade Center evacuated. Last week, that exchange, which was featured in the Eddie Murphy movie “Trading Places,” was bulldozed.
However, the NYBOT was the only exchange in the world with a backup facility and was the first to re-open for business after the Towers collapse . . . only this time it’s in Queens. Now the 1,200 traders and clerks and the 260 staff members are crammed into the ground floor of a five-story office building at 23-10 43rd Street.
“It’s like going from a tavern to a closet,” said Michael, a trader from Park Slope.
The old trading floor is 12,500 square feet while the new one 3,000 square feet.
The exchange deals with commodities: coffee, cocoa, sugar and orange juice (OJ) among other commodities. The space is so tight that the traders have to go in shifts depending on their trades. Cocoa starts the day with trading from 7:30 a.m. to 9, while OJ ends it from 3:30 to 5 p.m.
The exterior of the office building humbles the high-adrenalin atmosphere of the trading floor. For break time, subdued members of the exchange hang outside, smoking and chatting.
The exchange is right under the roar of the elevated 7 train, blocks from Silvercup Studios and the shadow of the Citibank building.
Although some have become regular bar patrons of Shannon’s Pot on the corner, there isn’t much activity for these high rollers who are used to fine dining and shopping on Wall Street. Now they rely on a coffee truck that makes its rounds out front with sandwiches to go.
“These guys are used to dropping $200 on lunches and now they eat heroes,” said Michael.
But overall, people are happy to be back in business.
NYBOT has had this backup facility since the 1993 World Trade Center bombing. The space comes from a company called Comdisco, which provides disaster relief. “It was collecting dust,” said Guy Tailor, a spokesman for NYBOT.
The exchange was paying $300,000 a year for rent and people were questioning the expense. “Now everybody’s glad we have it,” said Tailor. It opened up for business on Monday, Sept. 17. Although it was ready to open shop the Thursday after the attack, it waited for its member companies to recuperate. The backup facility served as a mirror to the information in the old exchange.
According to NYBOT, one day out of business could cost the industry up to the tune of $3.5 million a day.
There were rumors that other exchanges were ready to take advantage of the opportunity to reap some benefit, but that is how the competitive world rotates.
Mayhem In The Pits
NYBOT deals with contracts of futures and options. According to the Webster’s Third New International Dictionary, a future is defined as “a contract for the purchase or sale of something to be delivered at a definite future and time and a specified price.” An option is defined as “a right to buy and sell designated securities or commodities at a specified price during the period of the contract.”
But to the layman reporter, futures and options are pits full of people yelling at each other and utter mayhem of buying and selling. This is the “open outcry” system, which has been around since the 1850s.
The former exchange had 13 pits of fiery traders, but this Queens facility only has two pits . . . thus the shifts. One is for futures and the other for options, each fitting 180.
Most of the action is in the futures pit and the options pit plays off it. Then there are phone booths with clerks and the runners that go back and forth to the traders.
Believe it or not, the worldwide coffee industry has their eyes focused on this pit. Benchmark prices are set during the coffee shift, which is between 9:30 and 11 a.m. and the whole world is now calling this Long Island City facility to trade the commodity.
The red carpeted, octagon pit is mostly filled with men that communicate by waving their hands and shouting numbers and words, only decipherable amongst themselves.
“Hey- Twenty-Forty,” shouts one man.
“Allen- Seven- Eighty,” shouts another.
The two basic hand signals involve one that is an inviting signal to come towards them. This is to buy. When they start swatting away, that’s to sell, sell, sell!
With a helpful explanation and look at the monitors, this reporter found out that a contract was made for coffee at 49 cents a pound for coffee in March 2002.
The Future Of The Futures
There have been talks that the exchange would move in with NYMEX (New York Mercantile Exchange), which is located downtown on the Hudson, but nothing has been signed. Ultimately, NYBOT wants to return to Wall Street for the convenience and accessibility for some it members. Many come from New Jersey.
In the meantime, NYBOT has the whole ground floor of the current office building and have two more floors under their guise. There are plans of knocking down walls to build four more pits.
Anthony Compagnino, a partner of East Coast Services and a resident of Staten Island, has a positive attitude, “It’s great- it beats going to the unemployment line.”
Although the pits are packed and noisier with lousy acoustics from a 15-foot ceiling, Compagnino said, “It’s become a little difficult because of the tightness- but it functions seamlessly.” He is steadfast, “in a time of crisis you have to accept what is dealt to you…it’s a packed hand in a poker table,” meaning you can’t lose with this hand of cards.