Whether retail investors profit from their bets on GameStop and AMC Entertainment or not, one group of companies looks set to cash in from the frenzied trading: stock exchanges. So-called meme stocks, which gained popularity through social media platforms like Reddit and Twitter (or X), have attracted retail investors looking to make a quick profit. These traders typically buy and sell stocks and options, a derivative, through their broker on a stock exchange. The following global companies, among the world’s 10 largest listed stock exchanges, have previously acknowledged a boost to earnings from the retail investor boom, and some have even cited measures designed to encourage them further. Deutsche Borse AG Deutsche Börse , which owns both the Frankfurt Stock Exchange and the Eurex derivatives exchange, has previously admitted to gaining from a rise in retail investor activity. “I think we were benefiting a lot in 2020 and 2021 from the tailwinds we had from the Corona time and also from retail investors who were trading … heavily,” said Eric Leupold, managing director and head of cash market at Deutsche Börse, on an earnings call in November 2023. DB1-FF 5Y line Deutsche Bank , Germany’s largest investment bank, expects shares of the stock exchange owner to rise by 21% to 214 euros ($231.45) over the next 12 months. The stock is traded in Germany, the U.S., the U.K., Switzerland, and Italy. ” Deutsche Boerse delivered good [first quarter 2024] results, and it is well on track to (over)achieve its 2024 guidance,” Deutsche Bank analyst Benjamin Goy said in a note to clients on Apr. 25. “Higher-for-longer rates are good for its net interest income as well as its fixed income derivatives franchise, and volatility made a comeback in April. Moreover, many secular growth initiatives … are performing well.” Euronext The pan-European stock exchange that operates trading venues in Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo and Paris, has been one of the most vocal in targeting the retail investor market. Euronext Chief Executive Stéphane Boujna said in 2021 that pandemic-era remote working had contributed to the doubling of trading activity by retail investors. “For retail investors, we will soon propose a simplified access to trading of a wide range of pan-European and US securities, leveraging on our existing [multilateral trading facilities] in Italy, the Global Equity Markets. We will simplify, broaden access to trading of non-domestic securities. Through this new innovative offer, we will offer retail investors a true one-stop-shop experience for equity trading,” he said in May 2023. The consensus price target of 19 analysts polled by FactSet points to a 13% upside for the exchange’s own stock. The stock is traded in France, U.S., U.K. and Portugal. Cboe Global Markets Cboe , one of the largest options exchange operators in the U.S. and Europe, has also made concerted efforts to encourage retail investor participation. David Howson, an executive vice president at Cboe Global Markets, said earlier this year that as some European regulators ban the marketing of derivates such as CFDs, retail trading activity is likely to move towards the options market. “The rise of retail options trading is another secular trend we’re excited to build on with more platforms coming online for index options trading later this year, giving retail investors expanded access to our products,” Howson said on an earnings call to analysts this month. Wall Street analysts expect Cboe shares to rise 8.6% over the next 12 months. “The quarter could mark the beginning of the new CBOE profile, one that has more stable and healthy revenue growth, is focused on margin expansion and serious about capital return,” said analysts at Oppenheimer in a note to clients on May 6. Intercontinental Exchange The Intercontinental Exchange could benefit from the trading frenzy, according to Hannah Gooch-Peters, global equity investment analyst at Sanlam Investments. ICE, which owns the New York Stock Exchange and several other exchanges, offers trading in stocks, bonds, commodities, currencies and derivatives. The company earns money every time securities trade at its venues. The company reported its biggest revenue and profits in 2021, partly due to heightened volatility in financial markets and the meme stock trading frenzy. Will trading be similar to 2021? Despite the rally in meme stocks this week, some analysts cautioned that it is unlikely to hit the levels seen in 2021. “Do we think more retail traders can jump in on the trend in the coming days? Yes. Do we think this is a repeat of 2021? No, and the chances we reach that stage are low,” said Marco Iachini, senior vice president of research at Vanda.
