Trading on U.S. equity markets averaged 6.6 billion shares a day in March, according to
As such, March was “a quiet month,” with market volatility fairly light, according to Tabb research analyst
The main measure of market nervousness, the CBOE S&P 500
At the height of the credit crisis three years ago, the VIX climbed to 80. Last year, when Standard & Poor’s downgraded U.S. debt for the first time, the index hit 40.
The absence of volatility tends to mean less trading. “Volatility is highly correlated with equity volumes as traders find more opportunities for profits, so when prices reverberate back and forth, they tend to be more active,’’ Tabb noted.
Concerns about different European countries’ ability to pay their debts remained. But, “there was no earth-shattering news last month to light a fire under trading,’’ the research firm said.
Overall, volume in the first quarter of 2012 was down 19 percent from 2011, Tabb said.
Tabb quotes one unidentified trader as saying, “Every week, volumes get worse and worse and worse and it’s crushing me.”
“High-frequency traders are also suffering since low volatility makes it very difficult for highly quantitative, very short-term alpha traders to make any profits,’’ Tabb said.
Equity funds had an estimated
“Unless we were forced to experience another market-shocking event like the U.S. credit downgrade or 2011 flash crash – both of which we could all do without – volumes will most likely remain low through the fall,’’ Tabb said.
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