Who said transparency boosts market liquidity? In August, we experienced the opposite. Opaque investment situations such as beaten down ‘junk’ financials, saw massive trading volume.
Online brokers probably made some decent commissions from facilitating this frenzy in the process. Latest data shows that online trading volume in speculative financial stocks jumped nearly 140% in August. In addition, trading in ETF’s jumped almost 40%.
Overall, August was a surprisingly strong month for online brokers. Charles Schwab, TD Ameritrade, and E*Trade reported 15%, 16%, and 18% higher volume than July, respectively. Clearly, the retail trader was out in force.
WSJ: The rise in trading volumes at the four firms is unusual, given that summer is typically known for lighter activity as many traders are on vacation. Analysts say the data in August mainly reflects a movement toward beaten-down names