Canadian stock market volume slump deepens

You may not see it in the price of Canadian stocks, which have been climbing, but traders are fleeing the Canadian stock market in droves.

New numbers Friday from Canada's biggest stock market show that by every measure, activity is down from 2011 even as broad market indexes climb in value.

Volume traded numbers on the Toronto Stock Exchange fell in February from January, and declined precipitously from 2011 totals.

TMX Group Inc. , owner of the TSX, said that daily average volume of stock traded on the TSX is down 21 per cent so far in 2012. The average value is down 19.1 per cent, and the number of transactions is down 1.7 per cent.

Volume was down 3 per cent in February from January.

All this as the main TSX index is up more than 5 per cent year to date. Where has the volume gone?

Not likely to other Canadian markets. TSX has largely stabilized its market share at about 62 per cent of all Canadian stock trading by value, while its share of volume has been rising.

What's happening in TMX numbers reflects a decline in activity across all markets as investors of all types cut back on buying and selling stocks.

Retail investors have all but dropped out of the market, say some traders, disheartened by bouts of tremendous short-term volatility amid flat long-term returns. High frequency trading activity is also down, falling with overall volumes.

For brokerage houses that depend on per-share trading commissions, the numbers signal that 2012 is going to be a tough year for sales and trading desks.