The Philadelphia Stock Exchange opened new headquarters here today, with optimistic predictions and rhetoric as buoyant as the multicolored balloon anchored in the stock exchange building's eight-story atrium.
"We decided to make the move because we had faith in ourselves, faith in this city and faith in the future," said PHLX President Nicholas Giordano after Philadelphia Mayor William J. Green cut the ribbon, making official the full-scale trading that had been going on for several hours.
In the early 1970s, that sort of confidence would have appeared unwarranted.
New York's dominance was even more a fact of life, and regional exchanges looked as if they might go out of business.
But in the past several years, several factors -- including the rapidly expanding stock options business and an automated transaction system -- have combined to produce a boom of sorts in Philadelphia.
The signs of the boom are in the statistics as well as in the modern, highly automated new headquarters of the nation's oldest exchange.
Four years ago an options seat on the exchange could be bought for as little as $500. Today, although there is a buyer willing to pay $60,000 for an options seat, there are none for sale, according to Giordano.
In 1975, the exchange had a population of about 250, including clerks and runners. That population is now close to 1,200, according to John J. Egan, chairman of the board of governors.
In the first full year of options trading on the exchange in 1976, volumes was 1.26 million contracts. This year, in the first six months, volume was 4.24 million contracts.
"Certainly options helped us, but to say we wouldn't be in business without options is not correct," said Giordano. An option allows an investor to buy or sell a stock within a prescribed period of time at a specified price. Trading in options has been allowed since 1973, with the PHLX moving into the field in 1975.
The Philadelphia exchange now makes a primary market in 53 stock options, which means Philadelphia is the only place an investor may go to buy or sell such an option. The list includes several energy firms, such as the Virginia Electric & Power Co. Philadelphia also trades options in Conoco. These energy options have generated the most volume recently.
In the future, "I expect the proportionally greater growth will be in the equity side, because there's more room to grow," said Giordano. One factor that has increased equity trading in Philadelphia is the Philadelphia Automated Communications and Execution system (PACE). Nearly half the exchange's equity trades are on PACE.
The computerized system links 27 firms in 16 cities to the exchange and automatically gives investors the best deal available in either New York or Philadelphia. PACE is limited to transactions of fewer than 400 shares.
Philadelphia has also been an active participant in the Intermarket Trading System that connects all exchanges except Cincinnati and allows brokers to find the best deal in any market. About 400 stocks are traded on the ITS.
The ITS is supposed to move the securities business closer to a national market -- a development awaited with some anticipation in Philadelphia. For now, the Philadelphia exchange -- and other regional exchanges -- must live with the perception that the exchange is in New York, and that they are a somewhat less serious affair.
"It's a frustration," Giordano said. "One of our goals is to erase that perception."