THETRADETECH DAILY THE OFFICIAL NEWSPAPER OF TRADETECH 2025
Enhancing financial literacy is the key to retail success
How is differing market structure in the US and Europe resulting in more or less retail activity? Over the last two decades, retail investing in the US and Europe has evolved considerably as financial technology has developed and investing has become more accessible. In the US, retail investors have access to several robo-advisors and mobile trading apps which have appealed to the next generation of investors. In the UK, we have also seen retail investors embrace fintech.
At Nutmeg, we were one of the first roboadvisors and are now the largest digital wealth manager in the UK, serving more than 200,000 clients. Looking at Europe as a whole, there is still an opportunity to increase retail activity and reach a larger audience by catering to the different languages, currencies, and consumer preferences across the regions. Overcoming these challenges and nuances in the years ahead will ensure that retail investing appeals to a broader audience of investors and consumers.
What needs to be done to help drive more retail participation in the UK and EU? To drive retail investor participation in the UK and EU, enhancing financial literacy is essential. The world of investing can be intimidating for first-time investors who might be deterred by potential risks and not fully understanding financial markets and investment basics. At Nutmeg, we have worked hard to try to demystify investing, offering educational content and webinars alongside providing comprehensive online resources to our clients. There is always more to be done, and we definitely have exciting plans for the future, but this work has gone far in empowering investors to make informed decisions.
Another part of the puzzle is simplifying and optimising access. Retail investors need user-friendly, cost-effective, and intuitive platforms to easily initiate, manage and track their long-term investments. By
The TRADE sits down with Jason Conan-Davies, head of trading, Nutmeg, to unpack the role of diverging market structure when it comes to retail trading across the US and Europe, the current state of play across exchanges looking to attract more retail order flow, and how more retail participation could be attained in Europe.
innovating in this area, investing becomes more accessible and affordable while potential barriers to engagement are broken down.
Finally, we need to consider more ways to foster an investing culture across the UK and Europe. Public awareness initiatives and greater education early on are key to this but should be built on further so that a more supportive environment for learning and sharing investment experiences is nurtured.
What sort of changes are exchanges making to attract more retail order flow and enable institutions to better interact with it on their venues? In recent years, exchanges have made great strides to enhance transparency in the trading process by offering more comprehensive information on order flow, execution quality, and market data. This increased transparency has helped build confidence among retail investors, providing clarity on how their orders are processed and executed. At the same time, for institutional investors, having access to detailed insights into retail trading behaviour has allowed them to make more informed decisions.
By fostering a transparent trading environment, exchanges aim to attract greater retail participation and improve the interaction between retail and institutional market players. At Nutmeg, we are in favour of any push for more transparency, as it will give customers greater insights into their investment portfolios and the broader market. A consolidated tape in Europe would also allow the market as a whole to more accurately reflect fair value for assets which again will only be a benefit for investors.
How are you seeing brokers leverage retail flow on your behalf? Currently, we are seeing brokers leverage retail flow data to enhance liquidity in ETF trading. By gaining insights into retail investor behaviour and demand, brokers can more effectively match buy and sell orders, resulting in narrower bid-ask spreads and more competitive pricing. In turn, this has created more favourable trading conditions for retail investors.
Furthermore, we have also seen brokers take more inventory onto their books in response to demand from Nutmeg’ s customers. We saw this previously ahead of the launch of Nutmeg’ s Socially Responsible Investment portfolios when working with some of the largest ETF brokers. www. thetradenews. com 21