NZX figures highlight global trend

Automated trading has led to greater volumes going through the NZX, but the value of shares traded has gone down.

3 August 2012

NZX cash market trading rose in volume while falling in value last month, reflecting a global trend driven by increased use of automated trading that lets computers decide how to execute trades at the best levels.

Total trades climbed 13.5 per cent to 62,299 in July from a year earlier, while average daily trades gained 8.4 per cent to 3,150, according to the Wellington-based market operator's monthly metrics.

The total value traded fell about 13 per cent to $2.3 billion, continuing a trend of recent months. Volumes have risen while value has fallen from a year earlier for each month since January.

"There's been a global trend over the last five years toward algorithmic trading," Sam Stanley, head of business strategy and sales at NZX, told BusinessDesk.

"It's not something that dominates the market but it does have an effect."

Using machines to execute orders means a computer might, for example, buy 1,000 Telecom shares in 10 separate trades to ensure they are covered at the best levels, a time-consuming task if done manually by a broker.

"You hear these stories of dark pools, high-frequency trading but there's nothing sinister about this sort of stuff," Mr Stanley said. "It is very much a standard market convention in other markets."

NZX's July figures show total equity transactions rose 14.4 per cent to 66,426 while the value traded fell 14.4 per cent to $2.2b. By contrast, total trades of debt securities fell 4.1 per cent to 2,873 while the value rose 33 per cent to $111 million.

The market capitalisation of equities traded on the NZX rose 3.2 per cent to $59.1b in July from a year earlier while the value of debt fell 3.8 per cent to $15.1b.

NZN

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