5. Regulatory Hangover

The changes were subtle at first, but then it felt like a new world on Wall Street.

• Volumes began to explode. In June 2007, just before Reg NMS was implemented, average daily volume across all exchanges was 5.6 billion shares per day. Two years later, in June 2009, it had increased more than 70%, to 9.6 billion.1

• Stocks were “flickering” more. Quotes were changing rapidly without any trades occurring. Bids or offers disappeared the instant an order was routed to them. Trading in any kind of size was becoming extremely difficult.

• The market was becoming less personal. Institutional orders were being fed into algorithmic trading systems, which broke up the orders into smaller pieces sent into the market throughout the ...

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