U.S. brokers need time to heal
By KAREN HOWLETT, The Globe and Mail
With files from reporter Richard Blackwell
Thursday, September 13, 2001
TORONTO -- U.S. stock markets will be shut today for a third consecutive session but even when trading resumes it will take a long time for the shattered brokerages that feed the system to be fully operational.
The human toll in the industry from the devastating series of terrorist attacks will be enormous as firms struggle with the loss of employees, industry executives said. While the number of casualties remains unknown, the effects of empty desks are already being felt.
"The problem in this particular crisis is not about technology or systems," said James Kiernan, president of Goldman Sachs Canada Inc. "It's about whether they have the right person, whether he or she can get back in her chair to make a decision."
New York Stock Exchange chairman Richard Grasso said at a news conference yesterday that securities industry officials are committed to reopening the stock markets no later than Monday and perhaps as early as tomorrow.
"This American model, this dream, will be up and functioning and no one can interrupt that resolve."
But Mr. Grasso said securities officials cannot do anything that would interrupt the rescue efforts now under way in the heart of Manhattan's financial district. Rescuers are working around the clock looking for survivors after two hijacked airplanes demolished the city's World Trade Center on Tuesday morning. The New York exchange is located about five blocks from the center.
"There are still people trapped in that wreckage and we have got to be very, very careful that nothing we do from a marketplace standpoint in any way interrupts the wonderful effort on the part of those brave men and women who are down at that site trying to help and bring aid to those in need, those who may still be alive and trapped," Mr. Grasso said.
Most brokerage firms have backup sites in the event of computer failures or other problems that disrupt their operations. But the number of workers on Wall Street who are missing and presume dead has already made it difficult for Goldman Sachs to clear some bond trades done on Monday, Mr. Kiernan said.
Either the buyer is not around or the individual who would normally instruct a bank to pay for the trade is missing, he said. As well, the fact that no one can go south of 14th Street in Manhattan has also restricted the ability of firms' to clear trades, he said.
"It's still about getting people back to their desks," Mr. Kiernan said. He has two brothers who worked in the trade center, both of whom narrowly escaped.
Many Wall Street brokerage firms located near the rubble that once housed the trade center's twin towers spent the day yesterday relocating their operations. CIBC World Markets Inc. began moving all 2,000 employees in the World Financial Centre, a few hundred metres from the trade center, to its regional headquarters in midtown Manhattan.
CIBC World Markets' offices were successfully evacuated prior to the terrorist attack, chief executive officer David Kassie said in a statement.
"To the best of our knowledge, no CIBC employees lost their lives and only a handful sustained injuries -- none of which are life threatening," Mr. Kassie said.
CIBC said it has activated its business recovery plan, including relocating critical activities to its Lexington Avenue office in Manhattan as well as other sites in the United States and Canada.
Other Wall Street firms, including Bank of Nova Scotia subsidiary Scotia Capital Inc., could not get access to their backup sites located in Lower Manhattan yesterday because of the rescue efforts.
"However, secondary backup plans have been implemented and are working as expected," Scotia Capital chief executive officer David Wilson said in a letter to employees yesterday.
Scotiabank spokeswoman Pamela Agnew said the firm safely evacuated its 250 employees who worked on two floors of One Liberty Plaza in Manhattan.
That building also collapsed yesterday.
Mr. Wilson said that to the best of his knowledge, all New York staff members are safe and sound. But he acknowledged that many of the employees are coming to grips with the horror that many others were killed.
"Some of you may have friends and colleagues that have been more directly affected by this tragedy and our hearts go out to the victims and their families," Mr. Wilson said.
Canadian stock exchanges were set to reopen this morning, along with fixed income markets in the United States.
Morgan Stanley Dean Witter & Co., the largest tenant in the World Trade Center with 3,700 brokerage employees at the site, was scrambling to keep its business running yesterday.
A Morgan Stanley spokeswoman said the firm was moving its retail brokerage business to a number of its other offices throughout New York, and that "our operations are virtually normal."
She said the firm did have some back office operations in the World Trade Center, but none of the data stored there were "mission critical" files.
She would not comment on how may employees might have been killed in the disaster.