The SEC’s Rule 606 requires all broker-dealers who route orders in equity and option securities to publish quarterly reports, which provide a general overview of their routing practices. These requirements are intended to create more transparency in evaluating order routing practices.Įxhibit 2 Total Addressable Markets: SEC 606 Retail Brokers As of July 2022, popular “meme” stocks only accounted for approximately 1.7% of all monthly volume, falling significantly below even pre-COVID levels, when retail trading was much less publicized.Įxhibit 1 Monthly Trading Volume: Top 15 Meme Stocks Relative to TCVĭespite the decline in trading activity for popular “meme” stocks, the interest in equities trading among retail investors has remained consistent, as evidenced by the Securities Exchange Commission (SEC) 606 data illustrated in Exhibit 2, below. Just after June 2021, trading volume in “meme” stocks experienced a sharp decline, indicative of a waning interest in online retail trading movements. What is most interesting, though, is how this metric has evolved since, as the top 15 meme stocks shifted with popular sentiment.
As expected, noteworthy peaks are concentrated almost exclusively between the end of 2020 and the beginning of 2021, approximately the same period of time when these “meme” stocks were most prevalent in the news. Exhibit 1 below shows the monthly percentage of total trade volume in the top 15 “meme” stocks, relative to overall TCV. The team analyzed a dataset of the top 15 daily most-mentioned stocks on Reddit, along with Cboe proprietary datasets, in order to explore the dynamic impact that online trading forums have had on overall market structure. Through the analysis of factors such as share price, Reddit mentions, Total Composite Volume (TCV), and Limit Up/Limit Down (LULD) halts, we ultimately found that while there was once a strong relationship between social media activity and retail market structure, the strength of that bond has since significantly diminished.įirst, we consider TCV, a metric that measures total shares executed across all U.S. Cboe’s Equities Execution Consulting team recently looked back at the 2020-2021 “meme” stock phenomenon in order to further analyze the development of the role that online communities played in influencing retail investment trading activity within U.S. (NYSE:AMC) dominated global news headlines, pushing retail trading activity to all-time highs.
(NYSE:GME) and AMC Entertainment Holdings, Inc. The successes of social media-driven “meme” stocks including GameStop Corp.
By Cboe’s Equities Execution Consulting TeamĮquities trading activity among retail investors has grown significantly over the past few years, much of which can be attributed to the rise in popularity of online investment forums in early-2021.
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