What does it mean when trading volumes increase?

Trading volume refers to the number of shares or contracts traded in a security or market during a given period. When volumes increase, it means more investors are actively buying and selling, which generates more revenue for brokerages, exchanges, and other financial firms through commissions and fees.

How do brokerages make money from increased market activity?

Brokerages earn revenue in several ways when trading activity increases: commission fees on trades, net interest income from client cash balances, and payment for order flow. Higher trading volumes directly translate to more transactions and higher revenues for these firms.

What are market makers and how do they benefit from trading activity?

Market makers are firms that provide liquidity to markets by continuously buying and selling securities. They profit from the bid-ask spread - the difference between what they pay to buy and what they charge to sell. Higher trading volumes mean more opportunities to capture these spreads.

Why are these stocks considered cyclical investments?

These stocks are cyclical because their performance is closely tied to market activity levels, which tend to rise and fall in cycles. During periods of high investor engagement and market volatility, these companies typically see increased revenues and profits.

What is net interest income for brokerages?

Net interest income is the difference between what brokerages earn on client cash balances and what they pay clients in interest. When clients hold cash in their accounts, brokerages can invest this money and earn a return, keeping the difference as profit.

16 handpicked stocks

Trading Volume Surge: What's Next for Brokerages?

Interactive Brokers' recent earnings surge, driven by higher trading volumes, highlights a lucrative trend for the financial sector. This theme focuses on brokerages, exchanges, and financial technology firms that directly benefit from increased market activity.

Han Tan | Market Analyst

Published on October 17

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Interactive Brokers Group, Inc.

IBKR

Current price

$68.28

Leading electronic brokerage with strong Q3 earnings driven by increased customer trading activity and commission revenue growth.

Robinhood Markets, Inc.

HOOD

Current price

$75.31

Commission-free trading platform that benefits directly from increased retail investor participation and trading volumes.

Virtu Financial, Inc. - Class A Shares

VIRT

Current price

$38.86

Market maker that profits from increased trading activity through bid-ask spreads and market-making services.

Tradeweb Markets Inc.

Current price

$124.01

MarketAxess Holdings Inc.

MKTX

Current price

$180.33

CME Group Inc.

CME

Current price

$313.83

Join Nemo FREE today and unlock every stock

It only takes 60 seconds.

Your Basket's Financial Footprint

Summary of total market capitalisation and breakdown for the basket named 'Capitalizing On Market Activity'.

Key Takeaways for Investors:

Large-cap dominance generally implies greater stability and lower volatility, so the basket tends to track broad-market moves.
Best used as a core, long-term portfolio holding rather than a speculative, short-term growth position.
Expect steady, long-term value; do not assume rapid, explosive gains in the near term.

Total Market Cap

IBKR: $116.47B
HOOD: $116.81B
VIRT: $5.06B
Other

12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

≈

In 12 months it might be worth:

$1,000.00

+36.18%

≈

About This Group of Stocks

Our Expert Thinking

Interactive Brokers' recent earnings surge demonstrates how increased trading volumes directly translate into higher revenues for financial firms. This group captures companies across the trading ecosystem that benefit when market participation rises, from electronic brokerages to exchanges and fintech providers.

What You Need to Know

These companies earn revenue through commissions, trading fees, and net interest income on client balances. Their business models are cyclical and directly linked to market activity levels. This makes them tactical investments that can capitalise on periods of robust trading engagement.

Why These Stocks

Each company was selected for its direct exposure to trading volume increases. They operate across the value chain from brokerages and exchanges to market makers and clearinghouses, providing diversified exposure to the ripple effects of heightened investor activity.

Group Performance Snapshot

36.18%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 36.18% over the next year.

12 of 16

Stocks Rated Buy by Analysts

12 of 16 assets in this group are rated Buy by professional analysts.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

📈

Trading Volume Momentum

Interactive Brokers' earnings surge signals a broader trend of increased market participation. When trading volumes rise, these companies see direct revenue benefits from higher commissions and fees.

🔄

Cyclical Growth Opportunity

These firms are positioned to capitalise on periods of robust market activity. Their business models scale directly with transaction frequency, creating potential for significant profit growth during active trading periods.

🎯

Diversified Ecosystem Play

This collection captures the entire trading value chain from brokerages to exchanges and fintech providers. You're not betting on just one company, but the entire infrastructure that benefits from market activity.

Get the full story on this Basket. Read our detailed article on its risks and potential.

Read Full Insight

Why Invest with Nemo Money?

🆓

Zero Commission

Trade stocks, ETFs, and more with zero commission. Keep more of your returns.

🔒

Trusted & Regulated

Part of Exinity Group 2015, serving over a million customers globally.

💰

6% Interest on Cash

Earn 6% AER on uninvested cash with daily interest payments.

Discover More Opportunities

EV Supply Chain Opportunities to Watch in 2026

Rivian's introduction of the more affordable R2 SUV lineup marks a crucial turning point for the company's mass-market ambitions and production scale. This strategic move creates compelling investment opportunities across the electric vehicle supply chain, particularly for battery producers, raw material miners, and automotive software developers.

AI Arms Race Explained: Incumbents and Infrastructure

Meta's recent delay of its Avocado AI model highlights the immense difficulty of catching up in the artificial intelligence sector, even with a massive budget. This setback creates a compelling opportunity to invest in the established tech leaders who are maintaining their edge and the infrastructure providers supplying the entire industry.

Transparent Billing Stocks (Risks & Opportunities)

Adobe's $150 million settlement with the DOJ over deceptive cancellation practices signals a major regulatory crackdown on "subscription traps." This industry-wide shift toward transparent pricing creates significant opportunities for companies providing clear, consumer-friendly billing platforms and subscription management software.

Trading Volume Surge: What's Next for Brokerages?

Top Picks from This Group

Your Basket's Financial Footprint

12 Month Growth Potential

About This Group of Stocks

Our Expert Thinking

What You Need to Know

Why These Stocks