The Evolving Exchange System

Georgetown's Angel credits the quality of the market trading systems, which were able to process 5 billion shares in a single day. "One of the great advantages of having multiple competing exchanges is it forces them to be on their toes to be able to handle volume when it comes in, or else they'll lose market share to their competitors."

In looking at other "bad market days," when the 30-stock Dow Jones industrial average is down 2% or more, dating back to October, 2002, Birinyi Associates found that trading volume topped the 50-day moving average only half of the time.

Chris Johnson, chief investment strategist with Johnson Research Group in Cincinnati, says he's not surprised by how few record-breaking-volume days there have been in recent years. That's because of the range of alternative trading venues that people have migrated to, siphoning off volume that previously would have been on the major exchanges.

Dark Pools Muddy the Waters

Big institutional players like brokerages, for example, that don't want to disclose their trades prefer to make a market for each other's bids and asks through internal networks known as dark pools. Johnson doesn't know how volume of trades done through dark pools compares with volume on the open market.
"A lot of institutional money is going through these dark pools. With hedge fund activity, dark pool activity has grown significantly," he says. "Hedge funds don't want to reveal trading strategies or holdings. If you're operating through the open market, that information can be pieced together."
No matter how the trades are done, if volatility stays strong as some experts predict, the major exchanges should benefit.