Executive Summary

The Impact of Zero Commissions on Retail Trading and Execution stat bar

Beginning in September of 2019, major retail brokerage firms dropped their commissions to zero. Although other players had previously offered trading for free, the sudden move to zero seemed shocking. On reflection, however, this move was the natural progression of regulatory and competitive forces over the course of decades.

Now that zero commissions are part of the landscape, it is important to understand how we got here and what to expect next. Greenwich Associates believes that the future looks bright for retail traders, although attention needs to be paid to how retail brokerages continue to monetize those relationships. We also examine the role of the market maker in providing services to retail brokers.

Overall, we find that it has never been better for the retail trader, which is not likely to change in the near future.