Stock Market Self-Cannibalization To Continue As Volume Implosion Accelerates

Tyler Durden's picture

The 'what we lose in margin, we'll make up for in volume' strategy is failing. And for the NYSE it is failing large. The decision to 'enable' HFT - for its 'liquidity-provision', which after all has done nothing but expose the dismal reality of a market structure designed to nickel-and-dime retail til the last penny drops, has had the absolute opposite unintended consequence of driving the only real liquidity provider - the retail trader putting his real money to work - out of the market. As Securities Technology reports, the NYSE Euronext reports daily volume of trading stocks down 16.9% from a year ago (and down 17.8% YTD compared to last year) and down 9.9% from June alone. Trading in stocks on its exchanges in Europe were also down 12.3%. This plunge in stock trading has knocked into the derivative markets which have seen a massive 15.8% cliff-dive worldwide from June to July.


One more nail statistic in the coffin of CNBC's audience is a 29.7% drop in ETF transactions year-over-year and NYSE/Arca/MKT's share of trading in NYSE-listed stocks is down 34.3% from a year ago as the dark pools rise.


With volumes collapsing it is only likely that we will see far more 'incidents' such as Knight - where companies whose top-line explicitly stems from flow trading - increasingly find themselves redundant; whether or not this is due to a self-inflicted algo, or other, potentially more sinister, reasons.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
mrktwtch2's picture

we dont trade stocks here!!  lol

SilverTree's picture

Pass the Chianti please.

Pladizow's picture

Its a Skynet, Hal & Joshua circle jerk - where fingers are replaced by digits!

fonestar's picture

The sheep will stay in their stocks, mutual funds and 401k's until the bitter end.  It's what they were told to do.

4horse's picture

a bunch of the boys were whooping it up, at the malamute saloon

up/down a dollar, every other hour, winning/losing while downing that blue ruin . . .



ALGO: @ the klondike kasino
0.01 x 10k/s x 100cos. = desperate pennies an hour, picked-off-the-bones of these 
 0.02 ?
49er-type goldcos as, a buncha bucks, along comes that croupier to wipe the table clean




oh my.

Hype Alert's picture

Shouldn't the title read: HFT Cannibalization To Continue As Volume Implosion Accelerates since retail has left the building? 


I think at some point when the machines start fighting over the 10 remaining orders in the system, there will be more problems exposed.

Doubleguns's picture

I am still waiting for the HFT machines to battle it out. Maybe something like this.

DeadFred's picture

I suspect that when the market drops over the cliff volume will return if only for a bit. If your a buy and hold type why would you trade when the robots are pumping things for you. If you're an active retail trader you're just a myth anyway so we don't care what you hypothetically would do.

Buck Johnson's picture

Remember Jeffries everyone, I bet they are next on the block and it won't be pretty.  The bankers and the US want out of this mess without pain and it's not possible.  The spider has spun a web so complicated that even he is caught in it.

Precious's picture

Bernanke says, "Pay no attention to that man behind the curtain!"

eclectic syncretist's picture

He is the man behind the curtain.

Algos have ruined the market and everyone knows it.  Even those who don't smell a rat at this point.

Still time to get short here for those crazy enough to still be involved.  Bernanke's options are not nearly as robust as many interested people would like to believe.  In fact, what little is left of the Fed's credibility is at high risk right now.

CH1's picture

He is the man behind the curtain.

Right, but it was that man behind the curtain who said "pay no ateention to the man behind".....

silverserfer's picture

bernanke is NOT the man behind the curtian. HE is the wicked warlock of the East. The men behing the curtian are operating by cell phone from one of their 150 palaces spread across the world.

The Wizard of Oz's picture

Pay no attention to that man behind the curtain!

Zero Govt's picture

pay no attention to the fat cats living in the 151 palaces spread across the globe

..and that short chubby balding little oik with a beard too

zippy_uk's picture

Agreed - he is a dirty old man and he is naked

govttrader's picture

Bond Market, Bond Market, Bond Market!!!!  Thunder Cats Hoooooo!!!!

NotApplicable's picture

You're going to wear out your welcome real quick-like if you keep spamming every thread. Especially if you aren't adding anything to the discussion.

Just sayin'.

DrDinkus's picture

FWIW, govttrader's call on the bond auction price action today was spot thank you, govttrader...

VisualCSharp's picture

He's a bottom-feeder; in this case, he's bottom-feeding off ZH's traffic.

Squid Vicious's picture

Must be busy in the Hampsteins...

HaroldWang's picture

Again, another important point that no one talks about on CNBC as they're all busy calling for SPX 1600 by EOY. It's really going to hurt these guys - no trading, no revenue. Scary situation when these guys start to come up with "creative" ways to make up the difference. Knight will look tame at that point.

Manthong's picture

I don't know , man..

I'm getting the feeling that the digital printing press has been displaced by the replicator that has no need for digital book entries.

Bunga Bunga's picture

Don't worry about low volume. There is not enough supply. Stocks are sold out.

FromGaltsGulch's picture

Well it's 3:35 ET and the NYSE volume has finally surpassed the volume from the 1:00PM close  of July 3rd..way to go NYSE...

Getting Old Sucks's picture

CNBS is pure propaganda.  It's the real Muppet Show.

Pladizow's picture

That would be a great skit - if someone could overlay the Muppet Show theme music over CNBC's Cramer!

Getting Old Sucks's picture

LOL, Becky can put her arm up his ass make him scream BOOYA! 

Pladizow's picture

Screaming BOOYA implies Cramer would feel Becky's arm!

alfred b.'s picture


    If it were not for reporting data, cnbs would have NO viewers!


johnjkiii's picture

Tell me when the 'I Love Lucy' reruns begin

sessinpo's picture

Already called this one 4 days ago.


"Yes, this was a setup. Not being talked about is the fact that KCG had $7.5B in cash as of their last quarterly statement in June 2012. They could have handled the loss. This was engineered to remove competition and control an avenue of the markets. Interactive Brokers needs to take caution (IBKR)."



"Watching them cannibalize each other should be interesting over the next few years."

buzzsaw99's picture

the lower the volume the higher the stock market

LoneStarHog's picture

Yeah! ... It is called a Hammerhead Stall and we all know what happens when gravity becomes stronger than lift.

slewie the pi-rat's picture

you fall into the shark-infested waters for lunch?

i think the sharks like bear a'la fresca;  thery've been having it for lunch all week...

whenever angela strolls back onto the bourse we'll get a bit more drama, but the banksters will take every point they get on the indices b4 that fateful day

what is angela thinking?

slewie intel indicates some pretty subtle indications to figure, here

  1. Merkel Government Embroiled in Gay Rights Debate
  2. Angela Merkel spotted changing swimwear in public

and check this out: SPIEGEL ONLINE Poll Barometer - SPIEGEL ONLINE where we see:

  • [even the polls look phoney, w/ the CDU-CSU perfectly flatlined for a month]
  • (and note that unlike the crappy greek polls, this one has a built-in CoalitionCalculator and slewie has ordered the home model from bavarianBenz)
  • {finally, there are not enuf pirates yet;  duh}
LoneStarHog's picture

Self-Cannibalization? ... Those last few bites are going to be a real bitch to accomplish.

Dollar Bill Hiccup's picture

One share to bid them all, One share to find them,
One share to short them all and in the darkness bind them

Cognitive Dissonance's picture

I hear it tastes like chicken.

Itch's picture

It would be interesting to identify whether there were any "stand-out" parties involved in buying everything the Knight Algo was selling. When you think about it, it would be the perfect crime in today’s uber-complex market, i.e. some algo conveniently goes berserk, and another algo in another location conveniently buys everything it sells...then the company files for bankruptcy, several hundred million go missing with no one looking for it, and no one is prosecuted because it was an “accident”.

pods's picture

Well GS actually did say their algo could be used to manipulate the market in unfair ways if stolen.

All algos are equal, but some are more equal than others.


tenpanhandle's picture

unfair in their case meant - someone else doing it.

MinnesotaMD's picture

I agree. Maybe it was no accident. Maybe they were using Whack a mole algo to destroy KCG for someone's profit. Talk about corporate espionage reaching new levels. Who wrote the algo program? What prompted it to cannibalize KCG? I would love to get full post-mortem.

adr's picture

The market seems to have broken at 2:30. I guess the Algo goal was to end the day unchanged.

The Dow had a nice triple top to almost the exact same price, and then fell 70 points, made the 70 points back and started going directionless for the next hour.

What algo driven madness will we find this time.

azzhatter's picture

I have $7K left in the market out of my $850K cash net worth. Haven't traded a stock in 14 months. Never felt better, couldn't care less what assholes like Cramer, Pisani, and the enumerous jackoffs paraded on TV have to say. I cashed in some 401K money early and paid a penalty 2 years ago to buy more metals. Fuck You Ben Bernanke

PeaceLover's picture

Nice did they 1099 you on the gold?

OpenThePodBayDoorHAL's picture

Stock Market Reverse Singularity: 1 Share of stock left, and BenB can mint 1 $10 Trillion Platinum Dollar Coin to buy it with.

Getting Old Sucks's picture

Cashed in half of IRA last year and will finish this year before taxes go up.  Cash is in 6 different banks, spread it around, don't go over that 250k mark and watch they don't lower it back to 100k.  Look for small solid banks.  If in NY area, Take a look at Ridgewood Savings on Bank Rate.

Click on MEMO and STATEMENT to see the figures.  I have dough in 4 of the big banks and a credit union.  Largest deposit in Ridgewood.