Investors are experiencing a rougher time trading in several financial markets. There has been a recent drop in liquidity which has made it harder to trade. Inflation concerns, trade anxiety, and tensions in Syrian oil markets are some of the noted causes of this drop in liquidity. Drops in liquidity are common during periods of market stress.

Liquidity is broadly defined as the ease with which an asset can be sold on the market without affecting its price. Liquidity is thus very important to a business as it directly affects its appeal to investors. If a business has low liquidity, then it's not very well positioned to face financial storms.

This liquidity problem has been worsening for a few years now. Investors predict that it began after the post-financial crisis regulations prevented banks from trading for themselves, forcing them to hold greater amounts of capital. This in turn decreased their liquidity, as they were not able to serve as intermediaries between buyers and sellers. Another reason for why we are seeing less liquidity right now is that investors are tracking bond indexes more closely, which creates a large demand for newly-issued bonds but leaves older ones without any interest.

This has caused investors to worry and as a result sell more than they have initially planned because they do not know where prices will go. The SEC is weighing the option to create more liquidity in small-cap companies by concentrating trades in such stocks to a single exchange. The average spread has shrunk drastically amid heightened market volatility: in 2017 there were 315.13 contracts and in 2018 it went down to 111.55 for options with monthly expiration dates. Other popular contracts have also experienced thinner trading. The number of contracts on the SPDR S&P 500 Exchange-Traded Fund Trust dropped off drastically during February and March, falling by more than 30% from last year's average.