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NYSE Reports 50% Drop In August Stock Trading Volume

Tyler Durden's picture




 

Last August, a 400 point move in the DJIA was the norm. This August, a 50+ point drop in the second coming of the "Balls to the Wall" DJIA was the green light for sheer market panic. While unknown if it is the cause, or effect, of this collapse in volatility, the NYSE just reported that August cash volumes imploded by exactly 50% from last year, one thing is certain: for banks, which no longer make money on net interest margin courtesy of ZNIRP, and $1.6 trillion in inert reserves, the bulk of which are used to buy TSYs, then promptly repo them back to the Fed and use the cash proceeds to buy 200x+ P/E stocks, imploding stock volumes mean only one thing - a collapse in revenues and profits, terminations of entire divisions, collapse in tax revenues for the US Treasury, an increase in deficit, the need for more debt issuance, and a green light for the Fed to monetizing even more supply. And just to avoid the noise from "unseasonal" Y/Y comparisons, in August total ADV dropped by 12.6% from July. ETF volume imploded by two thirds from last year, and 14% from last month. Cue the financial earnings forecast reductions ahead of Q3 results.

From the NYSE:

NYSE Euronext (NYX) today announced trading volumes for its global derivatives and cash equities exchanges for August 2012.  Trading volumes in August 2012 declined year-over-year and month-over-month due to a decrease in volatility compared to August 2011 and the seasonally slower summer period. In August 2011, trading volumes benefited from extreme market volatility in the U.S. and Europe.

Cash Trading

U.S. Cash

  • NYSE Euronext U.S. cash products handled ADV in August
    2012 decreased 54.6% to 1.4 billion shares compared to August 2011 and
    decreased 12.6% from July 2012.
    Year-to-date, U.S. cash products handled ADV was 1.7 billion shares, down 24.6% from prior year levels.   
  • NYSE Euronext’s Tape A matched market share in August 2012 was
    31.6%, down from 36.2% in August 2011 and down from 32.1% in July 2012.

European Cash

  • NYSE Euronext European cash products ADV of 1.1 million transactions in August 2012 decreased 50.1% compared to August 2011 and decreased 25.7% compared to July 2012.
  • Year-to-date, European cash products ADV of 1.5 million transactions was 10.9% below prior year levels.

Exchange Traded Funds

  • NYSE Euronext U.S. matched exchange-traded funds ADV (included in volumes for Tape B and Tape C) of 168 million shares in August 2012 decreased 67.6% compared to August 2011 and decreased 13.9% compared to July 2012.
  • Year-to-date, NYSE Euronext U.S. matched exchange-traded funds ADV of 217 million shares was 30.5% below prior year levels.     

For details on derivative volumes see here.

 

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Mon, 09/10/2012 - 09:15 | 2778058 Aziz
Aziz's picture

"Bear Stearns is fine"

Mon, 09/10/2012 - 09:18 | 2778065 gggunchi
gggunchi's picture

Lehman gets a AAA from me.

Mon, 09/10/2012 - 09:23 | 2778079 JPM Hater001
JPM Hater001's picture

Someone help please...Who said:

The only question is whether we change by choice or eventually buy the final destruction of capital.

and is the quote correct?

Mon, 09/10/2012 - 09:27 | 2778092 GetZeeGold
GetZeeGold's picture

 

 

Quality over quantity I always say.

 

Who needs volume?

 

Mon, 09/10/2012 - 09:36 | 2778112 Xibalba
Xibalba's picture

Can we get the VIX to 5 pls. 

Mon, 09/10/2012 - 10:29 | 2778284 THX 1178
THX 1178's picture

This is insane. This is insanely shocking, but we're all desensitized. 50% drop!? Got Damn!

Mon, 09/10/2012 - 09:50 | 2778152 otto skorzeny
otto skorzeny's picture

Karl Marx? or was it Pee Wee Herman?

Mon, 09/10/2012 - 10:54 | 2778384 larz
larz's picture

Pee Wee Marx

Mon, 09/10/2012 - 11:54 | 2778618 Turin Turambar
Turin Turambar's picture

Pee On Marx

Mon, 09/10/2012 - 09:50 | 2778150 brokenclock
brokenclock's picture

Now that the bottom line is being effected you will see change.  It's always about the money.

Looks like the word is spreading and it's taken more time then most people thought. Know way they keep the staus quo when revenue or profits are being effected. Maybe it means nothing anymore for the value of a company or it's price. If you take away the revenue and profits of the exchanges you will see them move for change to save themselves.

 

Thank sites like this for getting the word out and the people who read them. Looks like it's waking up everyone to the rigged game and manipulation that has been going on with HFT.

Take away the money and change has to happen.

 

Mon, 09/10/2012 - 09:19 | 2778068 PaperBear
PaperBear's picture

Will the last person to leave please turn lights off.

Mon, 09/10/2012 - 09:24 | 2778083 JPM Hater001
JPM Hater001's picture

Dont worry about it...eventually they will all go out all by themselves

Mon, 09/10/2012 - 09:35 | 2778108 GetZeeGold
GetZeeGold's picture

 

 

Zero sum game......guess what you win?

 

Mon, 09/10/2012 - 09:19 | 2778069 samcontrol
samcontrol's picture

Talking about volumes, wait until you see the yahoo messageboards users come onboard here. I wonder how ZH will treat this volume. I think his ends up in an IPO...say 8 years....

Jaque, Musk and co .. Do you think Bear Stearns is fine.
I think it is ...for about three more years.

Mon, 09/10/2012 - 09:19 | 2778070 ghengis86
ghengis86's picture

And of that dismal volume, how much is due to colo-server executed trading? Are there any humans left in this casino?

Mon, 09/10/2012 - 09:22 | 2778075 not fat not stupid
not fat not stupid's picture

CME also reported that its massive decline was just "volatility related". Both NYX and CME fully expect the muppets to return. God forbid they admit the markets are broken.

Mon, 09/10/2012 - 09:24 | 2778082 Waterfallsparkles
Waterfallsparkles's picture

That is really going to hurt their profits.  Especially when they are paying the HFT's thru rebates.  HFT seem to have cut the profitable paying traders out of the Market.

August had no volitility and was in a very narrow trading range.  Making it impossible to trade.

Mon, 09/10/2012 - 09:25 | 2778086 CheapBastard
CheapBastard's picture

I am guessing cap gains tax revenue will plunge due to lower volume.

Mon, 09/10/2012 - 09:26 | 2778087 adr
adr's picture

August looked like the full retard month of January. Humans only come into the market to sell what the bots drove up for them. Any human that wishes to sell before the predetermined price point will be slain by the PPT.

Hey look Lulu beat it's own sandbagged earnings. That means people will run out and eat $8 burritos, book vacations, and buy more auto parts.

Mon, 09/10/2012 - 09:28 | 2778094 firstdivision
firstdivision's picture

Trading volumes in August 2012 declined year-over-year and month-over-month due to a decrease in volatility

Nice job Potter! 

Mon, 09/10/2012 - 09:29 | 2778097 Kaiser Sousa
Kaiser Sousa's picture

soon brokers and those rat soup eating bankers will b standing out n front of the casino like the dudes n front of strip clubs tryin to steer the remaining suckers into the fraud market to b relieved of their last few debt coupon dollars....

Silver and Gold bitchez.......

Mon, 09/10/2012 - 09:31 | 2778100 SmoothCoolSmoke
SmoothCoolSmoke's picture

When cats are tough to herd: the solution?  Kill a bunch of cats.

Mon, 09/10/2012 - 11:18 | 2778489 Tijuana Donkey Show
Tijuana Donkey Show's picture

You mean make some chicken fried rice? Time to wok the kitty.

Mon, 09/10/2012 - 09:36 | 2778114 Jason T
Jason T's picture

here is your net interest margin for banks .. http://research.stlouisfed.org/fred2/series/USNIM  3.4% and going down

Mon, 09/10/2012 - 09:37 | 2778117 Chippewa Partners
Chippewa Partners's picture

This is easy to decipher,  MDB has backed away .........

Mon, 09/10/2012 - 09:39 | 2778124 ekm
ekm's picture

Finally, finally.

People confuse Liquidity with Available Cash.

Liquidity pertains to stocks avaialble for trading. If Primary Dealers have bought most of stocks thus increasing the average stock price of DOW from $50 to $70, that means that Liqudity will get worse;

 

Supply/Demand people, supply/demand - as valid as the law of gravity.

 

Regardless of how much money is thrown into the market, if not much is left to trade, then little will trade.

S&P at 400 soon. There's no other solution.

Mon, 09/10/2012 - 09:40 | 2778128 Miss Expectations
Miss Expectations's picture

The 50% mark has us teetering on the edge of all sorts of disasters.

Making a Killing:  The Untold Story of Psychotropic Drugging

http://www.youtube.com/watch?v=UDlH9sV0lHU&feature=youtu.be

Mon, 09/10/2012 - 09:41 | 2778129 NotApplicable
NotApplicable's picture

50%? Meh, they can do that every month, like forever.

Bragging about the new found stability the whole damn time.

Mon, 09/10/2012 - 09:52 | 2778159 Robslob
Robslob's picture

"On a long enough timeline all trading volume goes to zero"

Mon, 09/10/2012 - 09:52 | 2778160 Robslob
Robslob's picture

"On a long enough timeline all trading volume goes to zero"

Mon, 09/10/2012 - 09:56 | 2778170 El Hosel
El Hosel's picture

"The Market" was up today on lack of interest..... and anticipation of the same.

Mon, 09/10/2012 - 09:57 | 2778168 intric8
intric8's picture

The freaking sheeple are out of the market. That is why. No one wants to get their ass flash-crashed, with these damn cocksucking MM's chasing stops a whole 1000 points down.

Mon, 09/10/2012 - 10:03 | 2778173 Racer
Racer's picture

The marks have woken up and left the building

....and the rest is HFT's playing with themselves

Mon, 09/10/2012 - 10:11 | 2778193 yogibear
yogibear's picture

The bots can trade among themselves. All those dark-pools as well. 

Now it's how good your bot programs are. It's bot fight  time!

http://www.youtube.com/watch?v=7OFKSfnlcr8

Who looses big or wins big?

Mon, 09/10/2012 - 10:35 | 2778298 Bartanist
Bartanist's picture

I am thinking that when the banks' computers dominate the markets, pretty much everyone else remaining exits. And as a result, the computers can get more efficient at price fixing and do not need to trade as many shares to move price in the proscribed manner.

Evyerone should know by now that the equity markets are simply a mechanism for banker fraud. Why would anyone EVER put money into something such as that?

Sure, you can get price appreciation, but that only lasts as long as there is a guaranteed buyer for your shares... and that is one of the places IMO where this market has completely failed. Guaranteed liquidity is a disaster for free markets.

Mon, 09/10/2012 - 10:52 | 2778371 larz
larz's picture

You need to take back all the bonuses paid (or beat it out of them) to the jeenyus Harvard grads who started this race to zero.  Find the beeyotch who 'invented' CDOs too make them all pay the taxpayer back

Mon, 09/10/2012 - 10:52 | 2778375 larz
larz's picture

easy to find they all run hedge funds now

Mon, 09/10/2012 - 11:09 | 2778443 q99x2
q99x2's picture

Tired algos. Maybe they need sleep.

Mon, 09/10/2012 - 11:09 | 2778447 Plymster
Plymster's picture

"The freaking sheeple are out of the market."

"The marks have woken up and left the building..."

"The bots can trade among themselves."

 

Not to be contrarian, but all the people I know are still in the market and want desperately to buy large volumes of property.  These are the same morons that I knew in 2007 that were shouting at me to "Buy now or be priced out forever!" like I was a clown head in front of a Jack in the Box.

The sheeple have not gone anywhere and are still lining up to be sheared.  There may be fewer of them with less wool than 5 years ago, but they're still out there.

However, since Knight had their little episode of "HFTs Gone Wild", volume has vanished.  My guess is that there's some new algo out there that's laying waste to the other HFTs and everyone's temporarily pulled back to retool.  It makes more sense than a "come to Jesus moment" for all those 401k holders and uninformed "investors" I know who aren't even aware of HFTs, QE, or Labor Participation Rate.

Mon, 09/10/2012 - 11:13 | 2778460 yrbmegr
yrbmegr's picture

People increasingly suspect the game is rigged and don't want to put their money in it.

Mon, 09/10/2012 - 11:15 | 2778477 Dareconomics
Dareconomics's picture

On Fed Distortions

This is what happens in a centrally planned economy. When people learn that the market is rigged, they leave the market.

One of the reasons that Uncle Ben is flooding the market with printed money is to reduce volatility in the stock market. Volatility can lead to a panic, and a panic would be disastrous in our weakened economic state.

People have adjusted to the existence of the Bernanke Put. Short-sellers, put purchasers and other bears have been burned so many times in the last two years by market-distorting liquidity injections. In response, they have left the building. Bears are useful, because they add liquidity to the market by standing willing to sell securities. This liquidity has been crowded out by the Fed's action.

Investing has nothing to do with fundamentals anymore. All investors are attempting to front-run the Fed's next rounding of money printing, and they have bid up the asset markets to near record highs. Expensive markets are risky markets, so paradoxically the Fed has actually increased systemic risk.

If the markets were still functioning and not dysfunctioning, short-sellers would have stepped in and provided the necessary selling pressure that would have tamped down the exuberance of the markets. This is no longer happening, and  we are all the worse off for it.

While Uncle Ben thinks that he has pulled off quite the coup by purging volatility from the system, he has actually guaranteed that the next crisis, which will make the GFC look like a correction. Retail investors want no part of this and have been leaving the stock market slowly but surely over the past few years. Mutual fund outflows and declining ETF trading show that this trend has not abated.

This whole scenario is actually playing out like a Greek tragedy. Our protagonist is attempting to avoid fate, but the very actions he takes make this fate more likely and more catastrophic.

Bernanke is a student of the Great Depression. Bernanke is what is known as a "reflationist." With 20/20 hindsight, reflationists believe that had the Federal Reserve of the 1930's merely loosened monetary policy, the whole depression could have been avoided.

Reflationists are merely another version of interventionists that have taken over the intellectual mainstream. As such, all they believe in is intervention. The United States substantially eased monetary policy throughout the 30's by running large budget deficits and devaluing the dollar.

A common interventionist trope is that if the intervention fails, then it wasn't large enough. This is the road that Bernanke is leading us down. He believes that the problem with the monetary easing during the depression was that there was not enough of it, and now the only thing wrong with QE1, QE2 or Operation Twist was that we needed to more of it.

When you believe something for your entire adult life, writing papers, making speeches and teaching students these ideas, then it is way too late to change your mind at 58 years old. He keeps throwing money, our tax payer money, at our economic problems by purchasing assets from the banks and offering these same banks cheap financing. All the while, he never stops to consider that his actions are part of the problem.

Ultimately, the taxpayer is the one bearing the present costs of these dangerous policies. High gas prices are one effect of money printing. Another are these low trading volumes.

The taxpayer will also bear the costs of these policies after the next market crash. All of those securities on the books of the Fed will plunge in value creating a massive loss and unleashing the pent-up instability of the past few years.

Don't worry about Uncle Ben. He'll be fine. These cheap loans and asset purchases have guaranteed him a cushy job in one of the banks he subsidizes. It is the rest of us who will be cleaning up this mess for a generation. 

dareconomics.wordpress.com

Mon, 09/10/2012 - 11:26 | 2778523 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Executive summary:

Collapse bitchez!

Mon, 09/10/2012 - 12:03 | 2778648 resurger
resurger's picture

Tylerz,

The more posts you and fellow ZHers expose those cock suckers, the more wounds you inflict in this cornered monster, the more aggressive he becomes...

Let them bleed to death.

and Fuck the NDAA, Obama, Israel, AIPAC, and the US Government ...

Am out in November for dead fucking presidents to represent me.

 

 

 

Mon, 09/10/2012 - 12:36 | 2778769 Shizzmoney
Shizzmoney's picture

The lower the volume, the more a market can be manipulated.

Mon, 09/10/2012 - 12:39 | 2778771 GaryNeville
GaryNeville's picture

The PPT has been all over these markets for a long time now. Remember the Dexia rumour conveniently let out with 5 minutes of trading left on the NYSE, and the DJ ripped 300 + points in 3 minutes??

Sure enough the PPT bots were pre coded to make massive bid orders just ahead of the announcement, and they've been buying any dip since. Whenever the markets dips it rallies - if it dips .5% it rallies to flat by close, if it dips 2% it rallies to .5% down at most by close..

The markets aren't allowed to pull back - pull backs are healthy for the markets but Bernanke won't accept this. The only thing that will get volume back up right now is a pulll back - but its so over priced it'll have to come back 8% to draw joe public in. Will Bernanke allow this, or Obama, in a run up to the election?   I don't think so!

 

Mon, 09/10/2012 - 13:37 | 2779007 El Hosel
El Hosel's picture

......8% pullback will bring back the volume? Yeah, on the way down volume will pickup. Joe public knows the markets have been destroyed and they aren't buying any fucking dips, Bernanke will do it for them with more debt.

Mon, 09/10/2012 - 13:38 | 2779019 Sandy15
Sandy15's picture

I watch many charts and this market has been controlled by the Fed since March 09.  Even today, the capital put/call volume is down 7 million......declining capital is down 7 million, but the futures keep trying to push upward........  rigged, rigged, rigged....

 

You are so right, The Bernack will NOT let it pull back to something healthy. 

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