Last month, the NYSE American and Arca Options Trading Floors partially reopened with reduced headcount and new safety protocols. Following this, open outcry is now back to about half of its pre-Floor closure share of total market volume. Open outcry volume appeared to be drawing volume away from Auction, Complex, and Electronic trades.
|All Floors Closed||Arca Open||American Reopens|
|Jan 1 - Mar 22||Mar 23 - May 3||May 4 - May 25||May 26 - Jun 2|
In large institutional-sized trades of 5,000 contracts or more, we saw that Auction share, which had benefitted the most from the Floor closures, declined to near pre-Floor closure levels. It appeared these large trades were directed back to the Floors, however, the overall volume of large trades has not recovered to pre-closure levels.
Trade >= 5,000 Contracts
We observed that volume in trades greater than 100 contracts is at six-month lows compared to trades of 100 contracts or fewer, which are at record highs. This is indicative of growth in retail volume as a proportion of industry volume that does not typically trade in open outcry.
The reopening of the NYSE Amex and Arca Options Trading Floors started a healthy migration of options trading back to open outcry. However, even at these elevated industry volume levels, large institutional-sized trades have not fully returned to the market. We anticipate continued growth in open outcry trading as these trades begin to return to the market.
Multi-list options broke nearly all volume records in 2021, driven by the growth of retail participation: daily records (24 of the top 25 volume days of all-time came in 2021), monthly ADV records (April was the only month from 2021 not in the top 12 all-time), and yearly ADV records (37.3M ADV in 2021 was nearly 10M more than in 2020 and double the ADV in 2019).
Increased retail activity in the equities market has affected which stocks are trading the most, and when and where those stocks trade. We’ve previously highlighted retail’s impact on pre- and post-market volume and the opening auction, and now focus on the period immediately after the opening auction. Market participants often avoid this time of day due to higher volatility, an approach worth re-evaluating given current trends.
As the home of ETFs, the NYSE continuously works to strengthen market quality and provide the optimal trading environment for listing and trading ETFs. In April 2021, in service of this goal, the NYSE introduced new requirements and incentives for its industry-leading NYSE ETF Liquidity Program, including the assignment of additional market makers ("Less Active ETF Leads") for new and/or low-volume ETFs.