There are myriad metrics that offer some measure of the health of financial markets, ranging from the Dow Jones Industrial Average, to the CBOE Volatility Index, to monthly jobs numbers from the Bureau of Labor Statistics. But for market operators, market participants, and the firms that do business with them, one number arguably trumps all: U.S. equity trading volume.

The equity market has lost some luster in recent years as multi-asset trading gained ground, pushing more market participants into derivatives such as futures, options and swaps, as well as alternative investments including hedge funds, real estate and private equity. Also, a trend toward globalization has diverted order flow across borders, into European, Asian, and Latin American markets.

Still, the U.S. equity market remains the world’s largest, and its robustness — or lack thereof — holds implications for many other markets across asset classes and geographies. So activity in U.S. stocks can be viewed as the lifeblood for order handlers, trade routers and market operators.

“Making money on the execution side of things depends on volume,” said Sang Lee, managing partner at Aite Group. “If you’re a broker running an algo business, you’re tied to trading volume. Until overall trading volume starts to pick up, they’re competing in a hyper-competitive environment, and fighting for a piece of a smaller pie.”

U.S. equity volume has averaged 5 billion to 5.5 billion shares in recent months, down from 8 billion to 10 billion shares around 2009. Some market participants and observers say current conditions mark a cyclical low and trading will rebound within the next year or two.

Institutional market participants and market operators including broker-dealers, exchanges and alternative trading systems are most directly affected by trading volumes. One step removed from that are providers of software and technology, which depend on the spending of market participants and market operators.

“Spending seems to be pretty stagnant,” Lee told Markets Media. “There is certainly spending going on, but I haven’t really seen overall spending rise.”

Pockets of strength within software and technology include compliance, reporting capabilities, and post-trade processing, Lee noted. “We don’t really see much of an enterprise-wide uptick,” he said.

Many market firms have downsized to adjust to reduced trading volumes, and there is hope that the next adjustment will be higher. “There is a certain level of optimism ahead,” Lee said. “They’ve hit the bottom, and there aren’t really any more cuts that can be made. Now, they’re looking forward to try to figure out where the next wave of growth is coming from.”

Still, “there are a lot of obstacles, mainly new regulations,” Lee continued. “Firms aren’t concerned with regulatory changes themselves as much as the uncertainty that comes with it… Without any concrete conclusions, it is tough for firms to commit and make significant IT decisions that would inevitably follow any regulatory change.”