Nasdaq Stock Market Vice Chairman Alfred Berkeley said the stock exchange was prepared for a market disaster such as today's attacks on the World Trade Center because of a plan set up in the wake of the 1987 stock market crash.
The Nasdaq never officially opened this morning after two hijacked planes slammed into the World Trade Center. Like the other US stock exchanges, it will remain closed through Wednesday.
Moments after the first terrorist attack, Berkeley was on the phone with New York Stock Exchange Chairman and CEO Richard A. Grasso and the chairmen of the Chicago Stock Exchange and the Federal Trade Commission and other government bodies.
"I don't think the public understands how well prepared we are for disasters," Berkeley said in a telephone interview this afternoon. "We put in place our plan."
The "plan," as Berkeley calls it, includes a 3.5-inch book on procedures to follow during a market disaster. The stock market's executive management practices the drill daily.
Each morning, the head of each major stock exchange in the US picks up a phone in a special communications room that automatically connects him to an emergency network that is available 24 hours a day, seven days a week. The emergency communications network was mandated by the Federal Communications Commission after the 1987 stock market crash.
"We're very tightly coordinated because we know we're totally dependent on each other in a liquidity crisis," Berkeley said.
The Presidents' Working Group, a committee made up of the chairmen of the Federal Reserve and Federal Communication Commission and the secretary of the Treasury, was also created after the stock market crash in 1987. Discussions today will also determine when markets will reopen.
Liberty Plaza, located directly across the street from the World Trade Center, is home to a Nasdaq branch office with 200 to 300 employees, Berkeley said. The Nasdaq evacuated its Liberty Plaza offices after the first plane crash, which had been thought to have been an accident.
"All our people were out when a big amount of rubble fell on that building," Berkeley said.
Berkeley said there was also physical damage to the American Stock Exchange, though he couldn't elaborate on what it was.
"You need to understand: It looks to us from watching those videos that those planes went into the [World Trade Center] where Instinet [Group Inc.], Canter Fitzgerald and 15 brokerage firms that are Nasdaq market makers are located," Berkeley said.
"Four thousand registered [traders] give their address as the World Trade Center," he continued. "They pretty clearly targeted the financial marketplace."
Nasdaq's telecommunications and electronic network remained intact after the attack. "We believe our system is in good shape, including the communication POP center in lower Manhattan," Berkeley said.
Remaining open or closed "has nothing to do with our capabilities to perform, but what we think is an appropriate way to rebuild and see what our capacity on the whole Street is because it's all integrated."
After today's attack, most of Nasdaq's traders and other workers walked uptown, finding other brokerage houses from where they could phone family and friends and reconnect with clients.
"We just finished reviewing the airline manifest on all the flights that went down. We had 60 people flying today, and no one was on those planes. We were all jumping for joy."
Salina Morris, a spokeswoman for Merrill Lynch, whose headquarters are next to the twin towers, said, "Our buildings were not affected." She said the company's employees had been evacuated before the towers collapsed. "Our data center is up and running."
Beyond the "devastating" long-term effects on individuals and families, Berkeley said, "the great tragedy of this is that the market is all about a win/win model. Someone sells stock, and someone buys stock, and both people are happy. Terrorism is about a win/lose model.
"You grow the economic pie and increase standards of living around the world by the win/win models and reduce the standards of living and prosperity with the win/lose model. And that's what terrorism is."