Low Trading Activity Restraining Broker-Dealer ETF | ETF Trends

Even though U.S. equities are breaking new record highs, trading desks seem less than thrilled. As trading volume dipped to its lowest level for May since the financial crisis, broker dealers, along with related exchange traded funds, could face leaner times.

The iShares US Broker-Dealers ETF (NYSEArca: IAI) is down 6.2% over the past three months and declined 4.8% year-to-date. [Broken Down Broker-Dealers ETF]

According to Credit Suisse Trading Strategy data, trading volume on major U.S. exchanges averaged 5.7 billion shares per day last month, reports Dan Strumpf for the Wall Street Journal.

“The worst thing for a trading desk is for it to be slow,” Michael Antonelli, a trader for Robert W. Baird & Co., said in the article. “It’s a tough job when it’s slow because you start to overanalyze everything.”

Trading has been continually slowing down since the sharp uptick after the financial crisis in 2009. Last year, daily average U.S. stock trading volume was down 37%.

“It just seemed like someone turned the switch off,” Peter Schwartz, a stock trader at Macquarie Group Ltd.’s New York trading desk, said in the article

In light of the muted economic growth, unimpressive first-quarter earnings and rising stock valuations, investors are mostly staying put. Additionally, long-term investors are less active after last year’s impressive equity rally and are unenthusiastic about the low rates in fixed-income assets. [Tactical Sector ETFs]