PFOF Trends and the Explosion of Retail Trading

Alex Steiner
Anthemis Insights
Published in
6 min readJul 6, 2020

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Globally, millions of new retail traders have entered public markets in the past few months. Major brokerages such as Charles Schwab, TD Ameritrade and E*Trade have each added hundreds of thousands of new accounts in Q1 2020. Robinhood eclipsed those numbers, announcing three million new accounts so far, bringing the platform’s total number of users to over 13 million.

The increase in retail trading accounts comes at a time when public markets have entered a period of high volatility — catalyzed, of course, by COVID-19 — which sent major US indexes tumbling more than 15 percent in March and propelling the VIX as high as 85. As many are confined to their homes, with no live sports and with what some see as a generational wealth transfer opportunity, retail brokerages are surging with new demand. Further momentum behind this new activity of retail trading comes as major brokerages, following Robinhood, have cut commission fees to zero, further democratizing the ability to place trades in a cheap, easy and efficient manner.

Platforms have been adjusted to cater to millennial traders who are used to clean UI/UX, mobile-first platforms and instant gratification. Retail…

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