As frustrating as these erratic equity markets are for investors, they're fabulous for one particular group: Bay Street traders.
Three years ago, trading desks were in a state of panic as market volumes plummeted. The dearth of activity, which translated into lower revenues, led to all sorts of morbid predictions about the future for equity traders.
This year there's finally some respite from that depression. Trading volumes for the S&P/TSX composite index are averaging 195 million shares per day, compared with an average of 166 million at this point in 2014.
The biggest driver of this rebound is market volatility, particularly for energy shares. As oil prices capitulated, investors had to reorganize their portfolios. Large institutional players often turn to Bay Street traders to help them buy and sell in situations like this.
The benefits for bank bottom lines from this repositioning are substantial. Across the Big Six, revenues from equity trading were up an average of 36 per cent in the first six months of fiscal 2015 – though some of these institutions have U.S. trading arms, so the bump can't be solely attributed to Canada's volume rebound.
Those figures also relate to the period from November to April, because the banks have odd fiscal years. Trading volumes dropped in the second quarter of the calendar year, averaging 19 per cent lower than the January-to-March period. That made some people worry the volume bump would be short-lived.
Fortunately for traders, resource prices are tumbling again. That's already translated into a resurgence in volumes. So far, August's figures are up 25 per cent over the same point in the month last year.