Citi’s Reverse Stock Split Signals End of a High-Frequency Trading Era

As reported by Fierce Finance’s Jim Kim, it’s no secret that the savage decline of Citi’s stock into the penny stock zone was a huge boon to speed traders. Many of the firms made the stock–along with some other low-priced bank stocks–the centerpiece of their strategies, trading massive amounts to reap rebates from maker-taker exchanges. The stock sometimes accounted for up to 10 percent of all daily volume.

The much-discussed 10-for-1 reverse stock split, which is now in effect, has ended all of that. And you have to wonder how the high-frequency crowd will shift. The hit has been immediate, the effect palpable. According to Reuters, just over 49 million Citi shares traded on Monday, when the reverse split hit, down from the 412 million shares traded on average over the past 50 days. Many think this is permanent.

The domestic stock markets had their lowest opening volume since the end of last year. In the first half-hour of trading, total stock trading volume was 1.5 billion shares, notes the Financial Times. That was the lowest level during that time of day since December 31, which is usually a very extremely light volume holiday day.

It remains unclear if the reverse split will have an effect on the longer-term price of the stock.

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