Volume gone, volatility flat - so what does everyone think can solve this?
In nearly all markets (and I'm talking from an equity and index derivatives angle mainly, personally), volume is at a trickle, volatility is flat, spreads are tight as a gnat's arse, and there seems to be no hope on the horizon.
Market makers are finding it very hard (and if they disappear, along with it goes a source of liquidity for derivatives, thus further slowing recovery), prop houses and banks.
So what is holding recovery back? I'd really like to hear everyone's opinion. I've got my own - banks in equity and derivatives have cornered flow (internalisation), investor confidence is down, everyone's looking for the mythical sure-bet, in Europe and US - a new wave of regulation and potential taxing of exchanges is keeping people off the books and in the dark.
But how can this change?? Are there other aspects I'm missing?