Markets Turn Down the Volume Amid Rising Volatility

The video discusses the impact of volatility on bank business models, highlighting how traditional profit avenues have shifted. It explores the relationship between market volume and volatility, noting changes since the 2009 crisis. The role of high frequency trading and algorithms in exacerbating volatility is examined, along with the challenges of liquidity in equity and fixed income markets. The discussion also touches on the influence of passive funds and ETFs on market dynamics.

How has the traditional view of volatility in trading changed recently?

• Banks are making more money from volatility.

• Volatility now leads to increased volume.

• Volatility has no impact on trading.

• Volatility is no longer producing significant volume.

What was a key difference between the 2009 financial crisis and recent market conditions?

• There was no market participation in 2009.

• Volatility was lower in 2009.

• Volume increased with volatility in 2009.

• Banks had no profits in 2009.

What is one reason banks are unable to take advantage of current market volatility?

• They focus only on fixed income markets.

• They have too many participants.

• They are restricted from proprietary trading.

• They lack the technology.

How does high-frequency trading affect market volatility?

• It has no effect on volatility.

• It increases volatility up and down.

• It reduces the number of trades.

• It stabilizes the market.

What is a consequence of the lack of liquidity in the market?

• Higher profits for banks.

• Difficulty in executing trades.

• Increased trading opportunities.

• Easier trading conditions.