The trend is still less prevalent in Europe than in the United States, where retail investor participation in stock markets soared last summer before hitting extreme levels in January.
So-called meme stocks like US video-retailer Gamestop Corp and AMC Entertainment Holdings saw record inflows fuelled by retail investors sharing investment strategies on social media.
Trading in Europe is more fragmented given the number of different stock exchanges in the region.
Still, the share of total trading carried out by retail investors jumped to nearly 7 per cent by mid-2020 from 2 per cent in 2019, before settling at around 5 per cent currently, Euronext said.
By comparison, Jefferies analyst Daniel Fannon estimated in January that retail can represent up to 32 per cent of total US equity volume.
Meanwhile, the number of retail investors has doubled over the past 18 months on Euronext, the exchange’s CEO Stephane Boujnah told Reuters.
Following its purchase of Borsa Italiana last year, Euronext controls a quarter of the equity trading flow in Europe with exchanges in Paris, Amsterdam, Lisbon and Dublin, according to analysts.
Boujnah said market abuse regulations in Europe are much stricter than in the US, making it difficult for retail investors to combine forces and defeat the short selling strategy of some funds, a key driver of the “US meme stock phenomenon”.
Retail investors have also flocked to easy-to-use share trading platforms such as etoro, which signed up 3.1 million new registered users in the first quarter of 2021, compared to 5.2 million through all of 2020.
In the US, the trend accelerated after large brokers like Schwab and Fidelity dropped their trading commissions, following startups like Robinhood and Social Finance Inc.
A market structure analyst at a European brokerage said Euronext’s success in tapping retail interest was partly due to the exchange having a dedicated retail program, when in most European countries retail orders are sent to the local exchange. “It is a bit of a mishmash and in my view, the European retail trading landscape is ripe for change,” he said on condition of anonymity as he is not authorised to talk to the media.