NEW YORK -- A hot line installed in the wake of the 1987 stock market crash now directly links all the major stock exchanges with each other and market regulators. If war breaks out, it will undoubtedly be humming.
But how the markets will respond to hostilities remains unclear. According to Reuters and other reports that were denied by some exchange executives and officially confirmed by none, the exchanges have prepared for trading halts of at least 30 minutes.
"The markets have all talked to each other about what actions they would take, and I think there is some feeling if hostilities break out during trading hours, the other major markets are likely to close for some period of time, but there is no agreement," said Joseph Hardiman, chief executive of the National Association of Securities Dealers, the primary over-the-counter market.
"Our position is we will keep our market open unless all the other major markets were to close, and then we would close our marketplace for the same period they do," he said. "But we believe the markets should remain open to provide investors with ability to buy or sell securities and to discover how much those securities are worth."
It has long been the common wisdom on Wall Street that trading, even in the face of a minor panic, is ultimately less destabilizing to a market than an enforced calm.
But concern over involuntary halts has grown recently, even as activity in the financial markets has slowed, with buyers and sellers staying on the sidelines waiting for a definitive development in the Persian Gulf crisis.
At the American Stock Exchange, spokesman Bob Shabazian said a 30-minute trading halt had not been discussed by any official. However, "short and minimal" interruptions would be considered if news of war came during trading hours or if "the marketplace felt the public interest would be harmed," he said.
Last week, the New York Mercantile Exchange, the primary market for oil contracts, announced new rules that could close the exchange for an hour if prices abruptly move more than $7.50 a barrel.
President Bush has the legal right to close the exchanges, as do the various exchange heads. Three years ago, the Securities and Exchange Commission was granted more limited authority to the same effect. In practice, any action by the New York Stock Exchange, where the largest companies are listed, would be almost as influential as an official order.
The NYSE closed at the beginning of World War I, the end of World War II and immediately after the assassination of President John F. Kennedy. But it is keeping its gulf-related plans quiet.
"Until you have a set of circumstances presented to you, it would be inappropriate to speculate on what you may or may not do," said Richard Torrenzano, senior vice president of the exchange.
A decision by exchange officials could turn out to be irrelevant. Many in the financial markets expect any hostilities to begin during darkness in Iraq. That would mean there is at least a fair chance the start of war in the Persian Gulf might come after the 4 p.m. close of trading in New York, which is eight hours earlier than Baghdad.
That might delay the following day's opening as orders are balanced but fall short of creating an extended panic. In the meantime, security has tightened around the stock markets amid warnings of possible terrorist attacks.