Nasdaq has begun temporarily running its PSX exchange from a data center in Chicago this week, instead of its current home in New Jersey, amid the ongoing talk in Trenton of instituting a financial transaction tax.
The weeklong test by the world’s first all-electronic stock market began Monday and will end on Oct. 30. Nasdaq will move PSX back to the Carteret, New Jersey data center on Nov. 2, the exchange said.
By moving the operation to Chicago temporarily, Nasdaq is sending a message to New Jersey that the exchange can leave the Garden State quickly if it decides a financial transaction tax makes operating here unsustainable.
“Operating PSX out of the Chicago site will allow firms to gain additional confidence that they can react quickly in the event that Nasdaq decides to move the operation of all its market centers to its Chicago data center,” Nasdaq said in a recent trader alert.
The New York Stock Exchange also rerouted the processing of some trading operations for several days last month from a data processing center in Mahwah to the Midwest to demonstrate that it can easily be done.
At a recent Assembly committee hearing on the bill A-4402, NJBIA Vice President of Government Affairs Chris Emigholz said the proposed quarter-cent tax on financial trades processed at New Jersey-based data centers would make the state less competitive.
“These exchanges can, and will, be mobile if they need to be,” Emigholz said. “If they leave, losses in New Jersey jobs and tax revenues will go with them.
“If they stay, everyday investors will bear the added costs,” Emigholz said, noting the tax could adversely affect pension funds, IRAs, 401K plans and college savings plans for New Jersey residents.