U.S. equity volumes in August were “miserable,’’ Tabb Group said Tuesday.
But perhaps nowhere as miserable as at Knight Match, the dark pool operated by Knight Capital.
That venue saw its average daily volume drop to 25.4 million shares, according to Tabb. That was down 44%.
Other dark pools saw drops of between 4% and 17%. Down 17% were Liquidnet, to 31 million shares a day, and BIDS Trading, to 30 million shares a day.
Cheyenne Morgan, who manages the LiquidityMatrix for industry research firm Tabb Group, attributed the dropoff to the August 1 trading debacle involving lit exchanges.
On that day, Knight unleashed an algorithm that generated a flood of erroneous orders onto the New York Stock Exchange and other markets. The mistake cost Knight $440 million and 73% of its stockholders’ equity. A group of investors led by Jefferies & Co. came in with fresh capital.
Knight Capital already has reported that trading in its market making business fell 34.5% in August.
The company, which serves as the designated market maker in about 690 securities listed on the NYSE, said its market making volume in the month was $12.5 billion, down from $19.0 billion in July 2012.
“I think this is a good opportunity to reiterate just how much reputation and trust plays into trading,” Morgan said, about Knight Match’s drop.
After the Knight glitch, a Tabb survey of market professionals found that 50% of buy side respondents had a weak or very weak confidence level in the markets.
Tabb said total volume on the nation’s 13 stock exchanges totaled 3.7 billion shares a day. Volume on all lit and unlit venues, it said, was 5.4 billions shares.
