Institutions continue to dominate stock market trading but their share of daily activity is levelling out, according to a New York Exchange study released today.
Individuals showed a slight increase in their trading activity during the first quarter of 1976, when the survey was taken, over the previous 1974 sampling. And trading by member firms registered an equally slight decline.
Institutions, like bank trust departments and pension funds, during the 1950s and through the 1960s steadily increase their share of trading activity over individuals and the new survey shows this trend has perhaps stopped.
The results, however, are somewhat different with regard to measurements of share activity and of dollar activity. Institutions are far more dominant when the dollar value of their trading is measured, indicating a significantly higher average share price of their holdings over that of the individual investor, and this continues to increase.
Institutions and investment intermediaries accounted for 44.5 per cent of shares traded daily on the Big Board in the 1976 first quarter compared with 44.6 per cent two years earlier. The dollar value of shares traded by institutions, however, represented 54.7 per cent of the NYSE's daily total, up from 51.4 per cent two years earlier.
Individuals meanwhile accounted for 33.2 per cent of daily shares traded and 23.1 per cent of dollar volume in 1976, compared with 31.1 per cent and 23.1 per cent respectively in 1974.
And member firms showed a drop in share activity to 22.3 per cent from 24.3 per cent in 1974, and their dollar volume share dropped as well to 22.2 per cent from 25.5 per cent two years before.
Leaving out member firms and considering only the public dollar volume, in 1976 institutions accounted for slightly over 70 per cent of the estimated daily average of $1.270 billion value of the 44.1 million shares of stock bought and sold by public customers, while individuals accounted for only 30 per cent of $377 million.
In 1974 the public dollar value proportions were 69 per cent for the institutions and 31 per cent for individual investors, and in 1971 they were 68 and 32 per cent respectively.
The study was based on activity in a very abnormal quarter - the first three months of last year when trading volume was the heaviest in history at an average of 28 million shares a day, nearly double the previous sample period - so the comparisons are not necessarily characteristic of what is currently happening to the market.
In discussing the individual participation in the market, Stan West, the NYSE vice president for research who directed the study, said trading on margin credit was a significant factor in the record volume of 1976. And he noted that more than half the public individual activity was on margin.
"This suggests that individuals being attracted to the stock market now are more sophisticated investors than previously," West said. The study said that the average public order, both institutional and individual, on the NYSE in 1976 was for for 446 shares worth $12.289 compared with 392 shares worth $11.601 in 1974.