Look at who does the trading:
1 ) High frequency traders are 56 percent of all trades. This includes proprietary trading shops, market makers, and high-frequency trading hedge funds, according to Tabb Group. But as volume and volatility drops, this group gets less opportunity to profit from the statistical arbitrage trades most of them do.
2) Institutional traders (mutual funds, pensions, asset managers) are 17 percent of the volume. They, along with retail traders using their own account (11 percent) are seeing less activity because average investors have been WITHDRAWING money from equity mutual funds for two years.
3) hedge funds (15 percent of volume) have also been trading less because stock picking has not been very effective this year — it's been mostly about getting the macroeconomic direction right.
