What does the "Digital Brokers Go Global" theme actually mean?

This theme refers to the growing trend of online investment platforms expanding beyond their home countries to reach international markets. The catalyst was Robinhood's successful launch in Europe, transforming from a crypto-only service to offering full stock and ETF trading. This theme captures companies that either directly participate in this expansion (like Robinhood itself) or provide the essential infrastructure that makes global trading possible (like exchanges and payment processors).

Why is Robinhood's European expansion significant?

Robinhood's move into Europe represents a major shift in the digital brokerage landscape. Europe has a large, relatively underserved retail investor market. By successfully expanding there, Robinhood demonstrates that the demand for low-cost, user-friendly investment platforms is truly global. This creates pressure for competitors to expand internationally as well, while increasing trading volumes across exchanges and payment networks that enable these transactions.

What are market makers and why are they included in this theme?

Market makers like Virtu (VIRT) are companies that provide liquidity to markets by continuously offering to buy and sell securities. They profit from the difference between buying and selling prices (the spread). As more retail investors globally begin trading through digital brokers, overall trading volume increases. This benefits market makers who handle a significant portion of retail order flow, allowing them to execute more trades and potentially earn more from spreads.

How do companies like Nasdaq (NDAQ) and ICE benefit from digital brokers expanding globally?

Nasdaq and Intercontinental Exchange (ICE, which owns the New York Stock Exchange) benefit in multiple ways. First, as more international users join digital trading platforms, overall trading volumes increase on their exchanges, generating more transaction fees. Second, these exchange operators sell market data and analytics, which become more valuable as the user base expands. Finally, they provide technology and services that brokerages need to handle increased international trading activity.

What's the difference between companies like Robinhood and infrastructure providers in this theme?

This theme includes two main types of companies: front-end brokerages and back-end infrastructure providers. Front-end brokerages like Robinhood, Interactive Brokers (IBKR), and Futu (FUTU) are the consumer-facing apps where people buy and sell investments. Infrastructure providers like CME Group, PayPal, and FIS work behind the scenes, providing the exchanges, payment systems, and technology that enable trades to happen. Both groups benefit from the globalization of digital trading, but in different ways—brokerages from direct user growth, and infrastructure providers from increased transaction volumes and service demands.

17 handpicked stocks

Digital Brokers Go Global

Online trading platforms are breaking out of their home markets and racing to capture international users. These carefully selected stocks represent the companies leading this global expansion and the infrastructure providers powering their growth.

Han Tan | Market Analyst

Updated 2 days ago | Published at juillet 1