How Kitchen Table Trading Changed the Face of Markets
(Bloomberg Markets) -- The past year has brought about a revolution in the public markets. With the pandemic and lockdowns turning everyone’s kitchen table into a trading desk, buying and selling has been moving from the New York Stock Exchange to Nasdaq to off-exchange venues. Meanwhile, the electronic trading boom isn’t just happening with equities, but credit too. Welcome to the new marketplace.
Taking It to the Street
Reddit’s WallStreetBets forum attracted millions of new subscribers in January. Online traders communicating there pushed up shares of GameStop Corp. in a bid to turn the tables on the hedge funds that were short-selling the video game retailer.
Pros vs. Amateurs
Newbies’ forays into meme stocks added to retail’s portion of equity volume.
What Retail Traders Bought and Sold
Amateur market participants were relatively active in industrial companies in 2020, according to Vanda Research, which looked at their trading in Russell 3000 sectors.
Trading of lower-priced stocks has shifted activity from the NYSE to Nasdaq.
Over-the-counter trading took off in 2021, rising to well above historical norms.
Where Furious Trading Amounted to Little
More shares of nonlisted than listed companies were traded in February, but the value of shares traded on exchanges remained far greater.
The New Thrift Market
In the last week of January, low-priced stocks accounted for more volume than they did at the same point last year.
Credit Goes Electronic
It’s not just equities that are changing. Electronic bond trading soared in 2020.
Treasuries’ Big Three
Established players control the majority of electronic Treasuries trading.
For Active-Fund Managers, a Respite or Time for a Comeback?
The gap between the best- and worst-performing sectors has widened since the onset of the pandemic. This should give active managers the opportunity to outperform their benchmark as they skew portfolios toward winning sectors and away from losing ones.
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