Retail investors can't stop trading

To say retail investors have reshaped markets is an understatement. Since GameStop stole headlines and launched a meme stock revolution, average Joes once dismissed by Wall Street have become impossible to ignore—and even harder not to cater to.

Now, regulators and exchanges are leaning in. For example, last week the SEC approved eliminating the Pattern Day Trader (PDT) rule, which required a $25,000 minimum for investors making four or more trades within five business days.

We spoke with Robinhood Chief Brokerage Officer Steve Quirk about what these changes mean, and what comes next for retail investors.

The following conversation has been edited for length and clarity.

What’s your reaction to the elimination of the PDT rule?

This rule being gone is a big boon for every brokerage firm, but especially Robinhood, because this is our sweet spot.

The rule never really made sense in the first place. It didn’t exist in other asset classes like crypto or futures. To me, the biggest benefit of having this rule gone is: Now, if I’m a newer investor with a smaller account, I’m on a level playing field with people who are wealthier and have a large account, which is the way it should be. You shouldn’t have rules that basically punish people in the early stage of investing.

What is the responsibility of brokerages to make sure investors are protected, now that some of the guardrails aren’t there anymore? Are they off the proverbial leash?

I wouldn’t say the leash is off, because the rule was pretty punitive. The rule just didn’t make sense anymore. When I first started in markets, you could buy something and hold it for a hundred years. But now, with how fast entire sectors come about–like AI—investors don’t have that luxury anymore. Previously, I would hold onto a stock because I didn’t want to pay the $100 to get out of it, and today, that process is seamless.

But do you think there’s a kind of deregulation that would be going too far in terms of protection for investors?

Every brokerage firm has an obligation to make sure what we allow customers to do is going to be suitable. So, there are thousands and thousands of OTC securities we don’t list because we know these could be dicey companies. Same thing with crypto assets, we don’t list every crypto asset that exists on the platform. If there are rules that try to define [what investors can or can’t do], it doesn’t matter—we’re going to use our own suitability standard.

At the same time, you also have to give traders agency. It’s very frustrating when you talk to young investors, and they aren’t able to participate in ways older or wealthier investors can.

A lot of indexes are moving toward 24-hour stock trading. Do you think that’s a good idea?

You’re talking to the right person here.

I’m a huge believer in equity trading around the clock. It really makes no sense that we chose east coast hours for equity trading. When we get newer investors just starting, it makes no sense to them, because many of them are doing their homework after work. And second, the rest of the world is enamored by US markets.

So there are many reasons why it makes sense to make it 24/7. People say there isn’t enough liquidity or participants, but you can say that about anything. And by the way, many other products trade around the clock, like income, energy, and of course crypto.—LB