The chart (from Nanex blog) shows how many quotes it takes to get $10,000 worth of stock traded in the U.S. for any point in time during the trading day over the last 4.5 years. Higher numbers indicate a less efficient market: it takes more information to transact the same dollar volume of trading.
Quote traffic, like spam, is virtually free for the sender, but not free to the recipient. The cost of storing, transmitting and analyzing data, increases much faster than the rate of growth: that is, doubling the amount of data will result in much more than a doubling of the cost.
What is happening that there is a lot of fake parties in the market, collecting information or hunting for an error. The first problem of any bona fide trader is to identify who is really interested and who is just wasting his time. The way of combatting is to have fixed prices: no bargaining.
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