Avramovic noted that options and futures volume set a record in 2011, as investors hungry to add risk looked for a place where they could use leverage.

“The options market has been breaking records for nine straight years and the shift has been a growing field that provides protection and leverage,” said Pete Najarian, co-founder of TradeMonster.com, an options and equity brokerage.

The Credit Suisse analyst also notes that high-frequency trading, which accounts for half of all market activity, has been on the decline since last summer. What’s more, Citigroup alone accounted for 7 percent of all volume in the second half of 2009 before its 10 for 1 reverse split, according to the report.

But the answer may be simpler than this. After two vicious bear markets in a decade, the average investor simply doesn’t trust this market anymore.

“There is no fresh money going into the markets,” said Doug Kassof Seabreeze Partners. “Why should we be surprised the retail investor is not there? We’ve had two huge drawdowns in stocks since 2000, a flash crash two years ago and real incomes are stagnating.”

Stock mutual fund flows are negative on the year despite a double-digit percentage gain for the S&P 500 in 2012. Meanwhile, bond funds of all kinds keep garnering more assets, even with interest rates in the basement.

Some investors blamefinancial regulation for the poor volume, saying it has restricted trading activity by the major banks. But others believe the banks — and their hand in causing the worst financial crisis since the Great Depression — are ultimately to blame.

“The financial industry has placed itself above the investing public ("muppets") and will take every advantage it can secure,” said Alan Newman, author of the Crosscurrents financial newsletter. “The public's confidence has been shattered, possibly beyond repair.”

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:00 ET on CNBC. Follow @CNBCMelloy on Twitter.













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