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Stories of Interest
- Banca IMI Securities to Pay $35Mn for Improper Handling of ADRs in Continuing SEC Crackdown
- Members of White House ‘Arts Panel’ Resign En Masse in Protest of Trump
- FINRA Whiffs on Disciplinary Sanction: Bill Singer's 'Negligent Market Manipulation in OTC Stock Promotion'
- Heather Heyer’s Mother Says, ‘I’m Not Talking to the President’
- Goldman Sachs May Have Lost $100Mn on Energy Bet Gone Wrong
- SEC Drops Case Against Ex-JPMorgan Traders Over 'London Whale'
- Financial Advisers That Invest in Technology Need to Accomplish These Two Things
- FINRA Amends Codes Regarding Expedited Arbitrator List Selection
- FINRA July 2017 Quarterly Disciplinary Review (Podcast)
- Senior Exec in Citigroup's Equities Unit Has Left
- Prudential Plotting its Escape From Fed's Tough Oversight
- Why CEOs Spurned Trump's Business Councils, in Their Own Words
- A Stockbroker, Her LLC, and Her Customers' Loans (Or Investment?) - Bill Singer
- Brian Quintenz Sworn In as CFTC Commissioner
- A Gary Cohn Resignation Would 'Crash the Markets' – Mgmt Guru Jeffrey Sonnenfeld
- Trading Firm DRW to Buy RGM Advisors - As Low Volatility Forces Out Weak HFT Players (subsc reqd)
- Reputational Damage - Rajat Gupta on Hard Road to Recovery
- 7th Circuit Affirms Spoofing Conviction - Bill Singer
- Wells Fargo Announces Board Changes
- Judge Rules Against Ex-Goldman Employee in Fed Leak Case
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NEWSLETTERS & ALERTS
Wall Street News
Where’s the Beef? Market Volume and Volatility
[Photo: Wendy's 'Where's The Beef' Commercial from 1984 / YouTube]
Stock market indices are crazy up since their last dip on November 4 ,2016 - the Dow is up 15.7%, S&P 500 is up 13.2%, and Nasdaq is up 16.9%. And, bank stocks are leading the way. So you’re thinking, if only banks could make markets and trade for their own accounts they’d be minting money.
Except nothing can be further from the truth. Traders are languishing in this market. Stock trading is slow. Volume and volatility are low. And realized volatility – the actual volatility of the S&P 500 over successive 30-day periods – is near historic lows.
While many market experts haven’t a clue, some possible explanations for recent trends include, the following:
- Trading technology – automated traders, and various types of algo traders – have made the markets extremely efficient.
- ETFs are reducing volatility because investors can trade the ETFs without trading the basket of underlying stocks.
- The Fed has tamped down volatility for years by keeping rates low and essentially encouraging people to buy equities due to its quantitative easing program.
That said, traders can try and wait for the trends to reverse, or they can figure out ways to reduce costs or gain economies of scale.