NOTICEABLE pick up in ETF and Futures Volumes

· Desk Color – cash - Monday and Tuesday of this week we saw a NOTICEABLE pick up in ETF and Futures Volumes as our clients have used these vehicles to hedge out their portfolios (from macro events) while volumes in single stocks have lagged (from an institutional level.)   Today, we have seen a NOTICEABLE pick up in single stock cash volumes as PM's are going through their portfolios with a rake weeding out single stock names (both winners and losers.)  ETF $ value traded as a % of total $ value is at 34% today (below the recent 37%+ avg.).  Typically in times of mkt duress the Buyside almost always first manages direction (hedging), then manages basis (single stocks.)  

· Desk color – PT - we were very busy Monday and Tuesday.  Morgan saw "unusually high notional amounts" across the desk as institutional clients rebalanced their portfolios sector wise.  These big shifts in the mkt cause the sector skews within their portfolios to get out of whack.  The rebalancing can be seen as a macro/hedging effort.  Now its very quiet today as your volumes on the cash desk increase as they have time to go through and look for active opportunities in single names.