Volume Is Lower Because, Well, It Should Be. The Market Is Shrinking And Dark Pools | Exploring Markets

Volume Is Lower Because, Well, It Should Be. The Market Is Shrinking And Dark Pools

Companies are buying back more shares. They are having more reverse splits and less stock splits. There are also less IPOs than there were in the past. The market is shrinking and so is volume.

Another part to this is the rise of Dark Pools, which are private exchanges. Dark pools are used for several reasons.  They avoid HFT programs. They are private deals between two large financial institutions. Institutions have more complete control of the traded block. They can keep it discrete. Here is Bloomberg on the recent growth in Dark Pools:
Dark pools got a larger piece of a shrinking pie. Tradingat the New York Stock Exchange has declined to the lowest levelsince 1999, with the average volume over the 50 days ended Feb.28 slowing to 789.5 million shares, according to data compiledby Bloomberg. The 50-day average for all exchange-listedsecurities, including transactions on dark pools, fell to 6.62billion shares on Feb. 28, the lowest in Bloomberg data goingback to June 2008.
 Here's Investor's Place on Dark Pools impact of volume:
To be clear, dark pools eventually report volume back to the major exchanges — they have to, since the transactions get resolved as “over-the-counter” trades. But detailed information about the volumes and types of transactions isn’t there, and the true impact on the public market doesn’t happen until the trades have long been resolved.
Now consider what we've learned about Dark Pools and add this segment from  USA Today to the mix; had this to say on the shrinking stock market:
"The Wilshire 5000 can’t maintain enough companies to reach its namesake number. There now are 3,678 companies in the index, is down by more than a third in a decade and off by nearly half from its level in 2000, says Wilshire Associates.

The number of publicly traded companies always ebbs and flows, but the current number has fallen steadily since at least 2000. At 3,678, the number of companies available for the public to invest in is much closer to the low of 3,069 in February 1971 than to the high of 7,562 in July 1998. Granted, there are thousands of stocks traded on “Pink Sheets” and other lightly or unregulated markets, but the Wilshire 5000 only includes those that trade on an exchange such as the New York Stock Exchange or Nasdaq.

It’s not just a blip with the Wilshire 5000. The total number of listed securities trading on the Nasdaq OMX and NYSE Euronext exchanges was 4,916, according to the World Federation of Exchanges. The number of listed securities on these two critical exchanges has fallen every year since 2009 and is down 32% since 2000 and 39% from the recent peak in 1997. Making that more troubling: That number includes listings that aren’t companies, such as exchange-traded funds, which have soared in popularity."