The plunge in stock trading volumes is starting to cause real pain not only for the traditional exchanges and broker dealers. Bloomberg reports that one of the world's largest dark pool/block-trading brokers, Liquidnet, has just announced a 12% reduction in its workforce, letting 45 employees go. In a business where trading volumes define the top line, not only are broker-dealers about to experience major losses, but independent brokerages, in both light and dark venues, will continue to shed workers as long as the investor (either institutional or retail) refuses to return to stocks. And as Nic Lenoir pointed out yesterday, this will not happen as long as there is no confidence in the market, and while the realization that the US economy has hit unprecedented ponzi status continues to penetrate an ever greater sample of the US investing population.

Liquidnet Holdings Inc., the trading platform used by institutions such as mutual funds to buy and sell large blocks of shares, eliminated 45 employees this week because of a slowdown in business.



The cuts were confirmed by Rich Myers, a spokesman for the New York-based company. Liquidnet had about 375 employees before the 12 percent reduction. The job cuts were companywide, effecting people in trading, technology and transaction processing, Myers said

Those curious to find out more about the plight of the block trading business in a world where the pursuit of ever small order sizes is now the norm, should read the following Traders Magazine analysis. Yet cutting to the chase, the equation is simple: no trust - no trades; no trades - no profit. Which means that those who actually are left to trade the market will continue to decline, as the primary source of market capital - the retail investor, can not be substituted with any number of HFT gimmicks and Fed interventions.