When Reddit Can Break The Economy – Through The Securities Brokerage And Stock Exchange Market

29 Jan, 2021

Reddit’s community page ‘WallStreetBets’ created an uproar this week with a group of its members deciding to target short sellers of GameStop by buying an enormous number of stocks in the company, resulting in a surge in its prices. By propelling this, they intended for the loss that hedge funds faced as these are generally owned and recommended by the leading and usually affluent investors of Wall Street. According to TBRC’s stock exchange services research report, the major players in the global securities brokerage and stock exchange services market are Northwestern Mutual, Bank Of America, Ameriprise Financial (AMP), Wells Fargo Advisors (WFC), and Raymond James Financial (RJF).

GameStop is now up by over 1700% since the beginning of the month, catching stock experts by surprise. While the Reddit community involved in this is benefitting greatly, the same cannot be said for hedge funds and short sellers as these investors predicted the stock to fall and thus bet against the company. These events are part of a bubble that will eventually burst, but it shows how easily the stock market can fluctuate, even by the hand of some “kids” and a tweet or two. The global securities brokerage and stock exchange services market size is expected to grow from $1.07 trillion in 2020 to $1.24 trillion in 2021 at a compound annual growth rate (CAGR) of 16.2%. The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is expected to reach $1.73 trillion in 2025 at a CAGR of 9%.

As per data on the Global Market Model, North America is the largest region in the global securities brokerages and stock exchanges service market, accounting for about 35% of the market. Asia Pacific was the second largest region accounting for 26%, and Eastern Europe was the smallest region in the global securities brokerage and stock exchange services market.

Brokerage firms are increasingly focusing on providing additional peripheral services to their customers around the world. Ad hoc peripheral services are unconventional trading solutions such as investment advice and planning services offered by brokerage firms to attract more customers. This is mainly to remain competitive in a price-sensitive market and capture a larger portion of the investors’ assets. For instance, firms are offering loyalty programs, retirement products and services, analytical software, and social components to increase their share in the market. Brokerage firms are also waiving minimum activity charges, providing free access to premium industry publications, and offering discounted fees for existing traders.