Rules that could alter the market are in the spotlight as exchange leaders gather at Piper conference – Reuters News in France and abroad

Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler listens during a meeting of the Financial Stability Oversight Council (FSOC) at the U.S. Treasury in Washington, DC, U.S., Monday, Dec. 9, 2013.

Andre Harrer | Bloomberg | Getty Images

We’re live Wednesday at Piper Sandler’s Global Exchange Conference, where the heads of major exchanges, trading desks, fintech and crypto companies will come together (both physically and remotely).

Speakers include Interactive Brokers CEO Thomas Peterffy Robinhood CEO Vlad Tenev Virtu CEO Doug Cifu Charles Schwab CEO Walt Bettinger CME Chairman Terry Duffy the Intercontinental Exchange, Jeffrey Sprecher, and Nasdaq CEO Adena Friedman.

Crypto providers like Michael Novogratz, CEO of Galaxy Digital Holdings, are also speaking out and increasingly looking to have more influence on exchanges.

Securities and Exchange Commission Chairman Gary Gensler will deliver the keynote address and is expected to present new proposals to address order flow payment.

But there is a bigger issue on the minds of exchange officials: Are tough times ahead for trading?

Will the titanic trading volumes last?

Trading is driven by transaction volumes and business has been exceptional. Since Covid, daily stock volumes have roughly doubled from around 7 billion shares per day to around 14 billion shares.

Why? First, the $0 commissions have been a boon to trading. Second, higher volatility generally breeds higher trading volume, which we saw in abundance in 2020 and 2021. Third, much of the upside in trading was initially due to an increase in trade activity from detail. This slowed during the market downturn in 2022, however, institutional orders took much of the slack. Trading in stock options and futures is also higher.

Will it last? Share prices on major stock exchanges have fallen this year on fears that the macroeconomic environment will deteriorate later this year and retail interest will decline further. A slowdown in the economy, and in particular a recession, would not be good for the volume of trade.

It doesn’t help that the competition is only getting tougher. Two new exchanges were launched in 2020, the Member Exchange and the MIAX Pearl Equities Exchange.

This has led to intense price competition. In response, exchanges are turning to other sources of revenue, such as charging fees for data, which now make up a significant portion of the revenue stream for both. ICE (NYSE) and the Nasdaq.

Gensler wants changes

High volatility drives more electronic transactions

Settle the issue of crypto regulation

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Rules that could alter the market are in the spotlight as exchange leaders gather at Piper conference – Reuters News in France and abroad

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