French AMF Sees Rise in Retail Investors, Neo-Brokers’ Popularity

The French financial market supervisor, locally known as Autorité des Marchés Financiers (AMF), has confirmed in a recent study that the number of retail investors has significantly increased since the start of the pandemic. Further, the retail investors are investing more with neo-brokers as opposed to traditional platforms.

In the study conducted between the third quarter of 2018 and the third quarter of 2021, the AMF examined around 218 million transactions made by French and foreign retail investors in the financial securities under the regulator's jurisdiction.

It concluded that there has been a ‘marked increase’ in the number of retail investors as the number of quarterly active retail investors jumped from 1 million until Q3 of 2019 to 2.5 million.

Though the interest of retail investors was pushed by the economic impact of the Covid-19 crisis, the number of active investors did not drop in the last three quarters even after reopening offices, the study highlighted.

Young People Are Now Investing

As for the average age of the retail investors, it dropped by 8 years to below 50 years since 2018. But, the average investor’s age has dropped down to 36 years old when only neo-broker platforms are considered.

“Usually dominated by traditional banks and online brokers, stock market investments by retail investors are increasingly being made via neo-brokers, all of whom are based outside France,” the AMF stated.

In addition, the popularity of the neo-brokers can be established as the number of quarterly transactions on these platforms leapt from only 10 percent in Q3 of 2018 to 21.8 percent in 2021. The active customer base of these neo-brokers increased at a pace of 12 percent since the start of the market study and have now reached above 400,000.

As for the investment behavior, retail investors with neo-brokers usually invest in complex instruments, and their decisions are heavily influenced by news events.

“In comparison with clients of banks and online brokers, neo-broker clients seem more inclined to trade in complex instruments and opt for stocks with a different profile,” the AMF added. “This behavior could be explained not only by a greater risk appetite but also by the range of instruments offered for trading by intermediaries.”

“The top ten most traded equities show that clients of neo-brokers are including smaller cap companies in their portfolios from sectors that are heavily influenced by news events. Lastly, although they trade more frequently, the average amount of transactions is also lower.”