Don't you hate it when markets go quiet

I remember a comedy skit from a while back in which the "news desk" reported that there had been no share trading on the markets today as everyone had what they wanted.

Well, Exchanges love volatile markets because by and large it increases share trading volumes. Moreover, the increasing trend to break share trades up into ever smaller sizes as a means of avoiding detecting and causing a market impact, also benefits exchanges as they normally charge a transaction fee.

Yesterday the London Stock Exchange reported trade volumes on SETS, its electronic order book, up 77% in the 6 months to end Sept. That's a average of 555,000 trades per day.

This increased volume has meant that more customers have qualified for volume discounts, which pushed their profit per trade down from £1.38 to 99p per trade. Still pretty decent for a system with a margal cost of zero and which benefits from hosting other people's activity.

posted by John Wilson @ 8:39 AM Permanent Link newsvine reddit


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