According to JPMorgan quant strategists, there was a significant surge in US retail investor activity around the US presidential election, comparable to the record highs experienced during the GameStop (NYSE:GME) trading frenzy in early 2021.
The Securities and Exchange Commission’s (SEC) Rule 606 data indicated that retail investors played a substantial role in the US equity market during the latter half of 2024, particularly around the time of the US election.
The data, illustrated in the report’s figures, show a marked increase in the percentage of equity trades executed by retail investors through over-the-counter (OTC) venues. Retail trades accounted for roughly 25% of all US equity trading, a figure that doubles the pre-pandemic norms.
Retail brokers, including ETrade/Morgan Stanley Smith Barney, Charles Schwab/TD Ameritrade, and Robinhood (NASDAQ:HOOD), route their trades to OTC markets through third-party venues such as Virtu Americas LLC, Citadel Execution Services, and others. The report noted a sharp rise in the share of OTC transactions routed by Charles Schwab/TD Ameritrade in the second half of 2024.
Furthermore, Citadel Execution Services was identified as the OTC market venue with the most significant expansion in retail flow during the same period. The transaction details between retail brokers and these third-party OTC venues are disclosed quarterly under SEC Rule 606.
In terms of volume, the number of US shares traded by retail investors soared, matching the peak levels seen during the GameStop episode at the beginning of 2021.
This explosive growth underscores the substantial impact that retail investors have on the equity market, particularly during periods of heightened political and economic interest such as the US election.
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