Commentary

Elaine Wah

Modern Markets, Modern Metrics - A Blog By IEX

In this blog by IEX's Elaine Wah, the newest public exchange looks to refute public claims that the metrics it uses are designed to inflate its own volume numbers and mislead people.

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May 31, 2004

The Best of Times, The Worst of Times

By Peter Chapman

Wall Street's equity desks turned in another poor year in 2003.

Members of the New York Stock Exchange and NASD reported equity sales and trading revenues of $22.7 billion last year, according to the Securities Industry Association. That's a decline of eight percent from 2002 when the equities business generated revenues of $24.9 billion.

The decline cut across both listed and Nasdaq desks. The listed business, by far the larger of the two, took in $19 billion in commissions. That's down from $21 billion in 2002. OTC sales and trading earned $3.7 billion last year, down two percent from the prior year.

Share volume figures explain part of the drop. Trading in both New York and Nasdaq shares last year was largely unchanged from 2002. New York listed names traded 1.7 billion shares per day on average. Nasdaq names traded 1.4 billion.

Commission rates are the other reason for the revenue decline. The SIA notes that program trading, with its lower per-share rates, is growing faster than trading overall. Indeed, it now reportedly accounts for nearly half of all shares traded on the New York Stock Exchange.

However, the news is not all bad. Brokerage proprietary desks are believed to have had a banner year. The SIA does not break out proprietary revenues by asset class, but reports "all other trading" soared.