NYSE's Last Gasp Before Death?
The New York Stock Exchange (NYSE) is gasping for air in perhaps its final days (or years.) The volume of stocks traded daily is spiraling downward. With around 1,200 floor traders left pacing the historic floors, the writing may be on the wall for the NYSE.
The NYSE reported that the total US cash trading averaged 1.8 billion shares daily during the opening week of May 2012. This is a 23 percent drop from last year and a 16% decline from the first quarter of the year. Most of the volume of daily trading in the stock market is performed by high-frequency traders through electronic stock trading on the NYSE.
For some individual stocks, this electronic trading accounts for as much as 70% of total volume. These electronic traders are blamed by some for causing the Flash Crash that occurred two years ago, this day. The Flash Crash of 2010 might have been the impetus that convinced retail stock investors to cease equity investing.
Lacking volatility in the stock market caused by retail investments, the market holds no allure for fast traders in the stock market. Over $250 billion in long-term equity has left the stock markets since the Flash Crash. At the peak of its success, the NYSE had a 90% market share in 1980. Today, its market share is only 25%. Moreover, the number of employees is down by nearly 2/3rds.