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The Reverse Split In ETF’s (FAS & FAZ) May Reduce The Market’s Volume By 5%

|Includes: Direxion Daily Financial Bull 3x Shares ETF (FAS), FAZ

A reverse split took place today for two of Direxion’s most popular leveraged ETF’s.  FAZ which seeks 300% of the inverse daily performance of the Russell 1000 financial services Index executed a 1:10 reverse split.  And, FAS which seeks 300% of the daily performance of the Russell 1000 Financial Services Index executed a 1:5 reverse split.

These two leveraged products have dominated the market in trading volume.  FAZ and FAS have been trading in excess of 200 million shares on a daily basis, reaching 300 million plus on heavy trading days.  With financials at the center of attention in market turmoil, they have become very popular for traders betting for or against financials. 

This reverse split may reduce tading volume in the markets by 5%.  This is a considerable amount of volume in what has been an already low volume market.  Some believe the reverse split was done to draw away attention  from the ETF’s which have drawn much criticism.  SEE:  Financial Industry Regulatory Authority Urges Caution On Leveraged ETF’S (FAZ, FAS)

“I think a lot of people are becoming critical, or at least looking at the composition of the ‘volume’ in today’s market place. FAZ and FAS are the triple long and short ETF’s related to the financials. FAS just announced a reverse split of 1 for 5, and FAZ just announced a reverse split of 1 for 10. Why? Splits do not matter, right? Unless you don’t want to draw attention to the volume,” Themis Trading co-founder Joe Saluzzi Said.

Disclosure: No positions