The technical glitch that
The NYSE is one of 11 public exchanges and more than 50 private venues where American stocks change hands. But MBS don't trade on an exchange the way stocks do. Instead, transactions happen dealer-to-dealer, with market participants using a combination of technology from vendors like TradeWeb and custom-built platforms to facilitate their dealings, explained Tom Millon, president and CEO of the Capital Markets Cooperative.
"Everybody, including myself, got scared to see the New York Stock Exchange shut down. But once we understood everything was trading elsewhere, it was fine," said Tom Millon, president and CEO of the Capital Markets Cooperative, in Ponte Vedra Beach, Florida. "Open orders that were on the New York Stock Exchange were cancelled, but they could just reinstate the orders somewhere else."
And while stock market events can factor into broader perceptions of risk that can affect MBS activity and mortgage rates, trading in the two markets is not otherwise related. But Wednesday's outage had little effect on MBS trading or mortgage rates.
"There was hardly a panicked reaction by any means," Millon said in an early afternoon interview.
Even with trading suspended on the NYSE, stocks were still trading on other exchanges, including Nasdaq, and global developments were carrying more weight with investors than the shutdown.
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Stock prices across the board have been down in recent days because of worries about the economic situations in Greece and China, but the NYSE outage also didn't appear to have a disproportionately negative affect on the stocks of publicly-traded companies in the mortgage industry.
The Dow Jones Industrial Average was down about 261 points, or 1.47%, while the S&P 500 closed down nearly 35 points, or 1.67%.
After trending downward all day, Genworth Financial was down 5% from its Tuesday close. It was the biggest lost on a percentage basis among the companies listed in NMN's Mortgage Industry Equity Composite, as well as a number of other real estate finance stocks.
Meanwhile, Stonegate Mortgage lost 4.26% during the trading day, with most of the loss seemed to occur after the NYSE resumed activity shortly after 3 p.m. EDT.
Trading volume was still mostly in a normal range for mortgage stocks.
While trading volume for many mortgage stocks was lower than their three-month averages, most stocks' volume was within a normal range. Two notable exceptions were Ellie Mae and Fidelity National Financial, which saw trading volumes well below average. Ellie Mae's stock price closed up $0.30 per share, or 0.43%. FNF ended the day down $0.33 per share, or 0.86%.
