Online brokers serving self-directed traders have been regarded as a niche within the financial industry. Before 2016 and the rise of Robinhood, they were rarely featured in the news. So what is the industry landscape now?
The US broker market is very saturated
In the US, there are a couple of electronic trading platforms, which grew with the expansion of the internet. TD Ameritrade, E-Trade, Fidelity, Charles Schwab, and Vanguard are some examples. Some, most notably Charles Schwab and Vanguard, have a large network of financial advisors. Others, like E-Trade, mostly build on their electronic platform.
Interactive Brokers has been broadly used by dedicated day-traders because of its very low trading fees. Professional traders also use NinjaTrader.
Recently, some fintech startups started to offer zero-commission brokerage services. Most notable among them is Robinhood, but WeBull is also popular.
There are also niche players specialized by the asset class you can trade with. One good example is Tastyworks, which specializes in options trading.
But this is not all. There are other players on the saturated market as well, such as Ally Invest, Firstrade, or SoFi Invest.
A lot of European and Asian brokers offer forex and CFDs
Contrary to the US, in Europe, a lot of speculative clients trade with forex and CFDs, which are special derivates for retail clients. This market is even more saturated.
An interesting aspect of the brokerage industry is that even though its digital nature would allow global service models, most brokers operate on a mono-country model and only some serve clients from all over the world.
Are super apps a trend in the US?
In the US, most of the conversation is around Robinhood, its strong customer growth and its new business model.
In Europe, and especially in China, the discussion is around another phenomenon, the so-called “super-apps”. Chinese investors trade on Wechat and Alipay, but these apps are far more than just trading apps. They are much more a tool through which you can live your entire digital life. In Europe, Revolut, a daily banking app with very strong growth, has also expanded its services to include stock trading.