Academic Research from Plato Partnership: Retail Investors in the Pandemic
London, UK, 22/11/2022 - Plato Partnership, the not-for-profit company bringing creative solutions and efficiencies to today’s equity marketplace, today released a new piece of sponsored academic research entitled ‘Retail Investors in the Pandemic’. The research has been conducted by leading academics Charles M. Jones from Columbia Business School, Xiaoyan Zhang from the PBC School of Finance at Tsinghua University, and Xinran Zhang from the Central University of Economics and Finance.
The paper explores the reasons for and impact of retail investors’ significantly increased involvement in the stock market after the outbreak of the COVID-19 pandemic. Using an algorithm that identifies marketable retail order flow in U.S. stocks, the paper finds that the aggregate marketable retail trading volumes increase from $3.4 trillion (9% of market total volume) in 2019 to 6.8 trillion (11% of market total volume) after the pandemic started.
This research looks at:
How retail order flows are related to future stock price movements,
How retail order activities are related to future market quality measures, such as liquidity and volatility,
How other important market participants trade in response to this retail activity.
This research is part of Plato Partnership’s Market Innovator (MI3) initiative, where the industry collaborates with leading academics to select the most important research topics for the marketplace. Plato then commissions, sponsors, and makes the research available for all market participants.
Read the full paper or the executive summary.
