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Does Floor Trading Matter?

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  • JONATHAN BROGAARD
  • MATTHEW C. RINGGENBERG
  • DOMINIK ROESCH

Abstract

Although algorithmic trading now dominates financial markets, some exchanges continue to use human floor traders. On March 23, 2020 the NYSE suspended floor trading because of COVID‐19. Using a difference‐in‐differences analysis around the closure of the floor, we find that floor traders are important contributors to market quality. The suspension of floor trading leads to higher spreads and larger pricing errors for treated stocks relative to control stocks. To explore the mechanism, we exploit two partial floor reopenings that have different characteristics. Our finding suggests that in‐person human interaction facilitates the transfer of valuable information that algorithms lack.

Suggested Citation

  • Jonathan Brogaard & Matthew C. Ringgenberg & Dominik Roesch, 2025. "Does Floor Trading Matter?," Journal of Finance, American Finance Association, vol. 80(1), pages 375-414, February.
    • Handle: RePEc:bla:jfinan:v:80:y:2025:i:1:p:375-414
    DOI: 10.1111/jofi.13401
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