New York-based online broker-dealer, TradeZero America has reported a massive spike in new account openings since the frenzied share dealing in GameStop and other firms emerged, fuelled by Reddit chat boards.
According to Dan Pipitone, Co-founder of TradeZero America, new account applications on Thursday surged by more than 200 times compared with the same period in 2020. The company attributed that to a huge interest in unrestricted access as investors look to pick up stocks that have been the focus of a trading war between amateur investors and Wall Street pros.
Many stock apps temporarily halted their dealings amid the extreme volatility in GameStop, AMC Entertainment and Blackberry, among the other companies hit by the restrictions.
The rate of new applications continued at the same pace overnight and into Friday morning, TradeZero said.
UK broker, Trading 212 had the same story yesterday, having temporally halted on-boarding of new users. Many platforms are already under pressure to keep up with the huge growth in retail investing, which is causing severe operational difficulties.
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More Access to Hard-to-borrow Stocks
“Word circulated on Thursday that TradeZero America retail clients were able to trade in stocks that had been restricted by Robinhood and other retail-oriented brokers. We believe in providing technology and market access that places knowledgeable active retail traders as close as possible to parity with institutions,” Pipitone said.
TradeZero America allows its ‘active traders’ to select the specific destination where their orders are routed for execution. Those who maintain a minimum account balance of $30,000 can take advantage of these features to increase both the speed and likelihood of order execution, while simultaneously lowering their trading costs by taking advantage of rebates.
Moreover, TradeZero America said it offers clients easier access to hard-to-borrow shares through a locate feature built into its platforms. This patent-pending feature enables TradeZero investors to sell their shares to other traders on the platform, which resolves one of the major disadvantages of shorting stocks that appear on a hard-to-borrow list. Most brokers require traders to pay high fees or enroll in special programs to have access to such stocks, given the relatively few borrowable shares coupled with the huge demand from short sellers.
TradeZero began as an international company, and investor demand led to the formation of its US arm, TradeZero America, which provides commission-free stock and options trading across all US states.