Discount Brokers Hurt Amid Low Market Volatility

“We believe daily average revenue trades (DARTs) at the discount brokers declined 2% to 4% m/m in November (+18% y/y) given our channel checks with private brokers,” say BMO Capital Markets analysts David J Chiaverini and Richard Fellinger in their recent study of discount brokers. This is a period when brokers usually see a seasonal 3% m/m uptick in DARTs, so what caused the fall? Low volatility pressured trading volumes The culprit was exceptionally low volatility prevailing through November. In fact the VIX never managed to surpass 14 during the month as also the monthly average of the lowest mark…