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Electronic brokers saw trading volumes double at the start of the year, second quarter looks just as strong

Historic stock market volatility, social distancing rules, and commission-free trading all contributed to a 100% year over year increase in dealing volumes for electronic brokers during the first quarter, with many e-brokers reporting record new accounts along with a 35-50% increase in mobile logins.

Piper Sandler analyst Rich Repetto who tracks e-broker trends, says record March quarter trading activity extended into April, with no signs of letting up.

Repetto claims that electronic broker’s shift to $0 commissions is one of the biggest factors behind the strong trading activity. “You can trade 20 shares one time, 50 shares the next time, to maybe get a better price on a different trade, and you don’t care because it’s free,” Repetto told CNBC on Wednesday.

The adjustments in portfolios from individual investors due to massive market swings have also added to an enormous year over year spike in online trading activity for TD Ameritrade (up 144%), E-TRADE (up 129%), Charles Schwab (up 98%) and Interactive Brokers (up 72%).

The number of logins for Fidelity Investments grew 56% year over year in March alone, while Robinhood’s trading volume tripled in March from the year-ago period.

Electronic trading

Interestingly, Ally Invest director Frank Lietke noted that a buy ratio stood at 71% in March, a month when S&P 500 tumbled to bottom out at around 2200 points on 23 March.

TD AmeriTrade chief market strategist JJ Kinahan saw investors interest spiking in two distinct groups.

First, investors, who were chasing dividends, had invested in dividend-paying companies like Exxon (NYSE: XOM), Chevron (NYSE: CVX), and Bank of America (NYSE: BAC). The second group of investors picked most beaten-down stocks like Carnival (NYSE: CCL) and airline companies.

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    Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

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