In the wake of the coronavirus-triggered market meltdown, off-exchange trading hit an all-time high share of the U.S. stock market, 44.93%, on April 27, according to Rosenblatt Securities. It was the third consecutive trading day where a new record was set.
Off-exchange trading, which includes everything from private stock markets called dark pools to trading giants using their own money to complete investor orders, steadily climbed to its record share throughout April, the S&P 500's best month since 1987. That came even as volatility persisted at levels well above normal. Usually, stock trading tends to concentrate on the heavily regulated "lit" exchanges run by the Intercontinental Exchange Inc.-owned New York Stock Exchange, Nasdaq Inc., Cboe Global Markets Inc. and IEX Group Inc. during more volatile markets as investors hunt for immediate liquidity, as was the case for much of February and March.
The biggest difference this time? Mom and pop investors.
"A lot of folks are now sitting at home subject to stay-at-home orders, so they might be more likely to trade than they would be if they were in the office all day," Rosenblatt Securities Managing Director and Partner Justin Schack said in an interview. "Usually when something gets cheaper, you get more of it."
Although April data is not yet available, equity trading volumes on dark pools ticked up in March and represented roughly 14.16% of the total market, according to Rosenblatt Securities.