Trading volumes on NYSE Euronext's (
) global derivatives and cash equities exchanges fell significantly
during August. Average daily volume (ADV) for global derivatives
fell 38.4% year-on-year as a decrease in market volatility over the
last year discouraged investors.
Cash products trading did not provide any relief either as U.S.
cash products ADV fell 54.6% whereas European cash products trading
volume was down 50.1% compared to August 2011. NYSE's main
), has also been hit hard by the prevalent economic conditions as
concerns over the growing national debt have adversely affected
investor confidence in the U.S.
$27 valuation of NYSE Euronext's stock
is in-line with the current market price.
See our full analysis of the NYSE Euronext stock
A Sign For Worry Or A Seasonal Low?
Derivative trading usually experiences a trough during the
summer months leading to September. This year, however, investors
in the U.S. have been particularly cautious. The daily average for
U.S. options traded through the NYSE in August fell 46.3%,
year-on-year, a decrease of 11.4% from the average for July. Trade
volume for NYSE Liffe, NYSE's futures exchange, decreased 53.9%
from 137,100 contracts traded in August 2011 to 63,200
To attract customers, NYSE has introduced three new futures
contracts based on MSCI global indices: mini MSCI Canada, mini MSCI
Emerging Markets Latin America and mini MSCI World index futures.
These contracts will be traded via NYSE Liffe. The futures will
allow investors to access global markets and will be particularly
lucrative for institutional clients looking to balance exposure to
North American markets as well as developed world markets and
developing South American markets.
Although currently depressed, we expect derivatives trading
volumes to pick up in the long term, especially since equity
returns remain low in the current economic conditions. Derivative
trading is the most important business for NYSE, accounting for
~60% of our price estimate.
NYSE's Retail Liquidity Program (RLP), which allows retail
investors to execute trades outside the traditional marketplace, is
off to a good start, with an average of 6 million share trades
executed per day in the first month. High-frequency brokers like
Tradebot Systems Inc, Hudson River Trading LLC and Getco LLC, and
RGM Advisors LLC have supplied orders for retail clients on the
platform so far, with transactions involving almost 2.7 million
shares across 281 companies. The platform might just provide the
shot in the arm that cash trading in the U.S. needs.
You can gauge the effect of a change in our forecast by
modifying the interactive charts above.
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