Surge in NYSE Volume Points to the Return of Small Investor

In a report pointing to a return of small investors to the stock market, the Securities Industry Assn. said Tuesday that daily share volume on the New York Stock Exchange in January reached the highest monthly level since last June.

It said trading overall jumped 24.1% from the sluggish December level and 4.2% from the 1988 average.

The improved trading volume benefited from a surge in retail trading, the SIA said, indicating increased stock market activity by small investors. Meanwhile, it noted, program trading and stock dividend recaptures accounted for a declining share of the total.

The retail sector accounted for a 24.8% share of total activity, up from 22.9% in December and 18.2% for all of 1988.

The SIA said dividend capture accounted for 2% and program trading activity subsided in January to 8.1% of the total trading. The combined total of 10.1% marked a steep decline from the 15.4% in December and the 20.7% in 1988 as a whole.

The high proportion of dividend captures and program trading in the past year was viewed as an unhealthy sign for the securities industry since it is high-volume trading that brings relatively low commissions for brokers.

But the securities trade group was reluctant to declare a new trend in the industry, based on the January figures. The association said the increased retail proportion was likely caused by the methodology of data collection rather than an actual rise in retail business.

The group said activity averaged 337.4 million shares daily in January, up from December’s 271.8 million and 1988’s average of 323.9 million. Since activity includes both buying and selling volume, the figure must be halved to be compared to daily volume as reported by the NYSE. The comparable NYSE volume is 168.7 million for January and 135.9 for December.