Once upon a time, they would call this a doldrum.
Average daily volume in stock trading is averaging 7.6 billion shares this year, according to a rundown of statistics at the market structure panel run Tuesday by Richard Repetto of Sandler O'Neill, the respected industry analyst.
That's down from a peak of 9.8 billion shares a day in 2009. At the time, the upside seemed limitless. In the crisis year of 2008, volume hit 8.9 billion shares a day. Even in 2010, it ended up at 8.5 billion shares a day.
Then came 2011. And the falloff -- horrors -- continued.
The average of 7.6 billion shares being traded each day is causing some hand-wringing. Maybe it's not a crisis of confidence on the part of investors (although that might contribute). It's at least causing a crisis of confidence in brokers.
But fear not. Brokers who geared up for continued growth in share volume are still ready. Bring on the 30-billion share day.
"We went through a once-a-generation volume event in the financial crisis and it might have been foolhardy for any of us here to think that in 2010 the slope of the growth was going to continue unmitigated for another 10 years,'' said David Johnsen, Goldman Sachs Electronic Trading's head of U.S. Liquidity Strategy on the first day of the Securities Industry and Financial Markets Association's Financial Services Technology Leaders Forum and Expo at the Hilton New York.
Seven or eight billion a day of shares traded may be the new norm. But fear not. Big traders, such as Goldman Sachs, are ready for record volumes to return.
"From a technology perspective, what's interesting about this is when we went through '07, '08 and '09 the ceiling went up every year. We weren't just trading more volume. But we were having more messages per volume traded,'' he said Tuesday afternoon.
Behind the scenes, the actual number of transactions that exchanges had to accommodate was going up 50, 60 and 100 percent a year.
"We all during that time and through now currently have had to make tremendous technology investments into our infrastructure, into our messaging, into our smart order routing capabilities, our market data,'' he said.
"I think all of us, in the broker-dealer community, prepared for the ceiling to be three or four times higher, than it was at the peak,'' Johnsen said.
Which means there is plenty of capacity ready to act when either confidence or volatility returns.
"Now we (at Goldman Sachs) have products at our disposal which stand ready for a three- or four-fold jump in volume day over day,'' Johnsen said. "So I guess we've bolstered our systems to a very good place."
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