The 2020 Trading Surge
During the first half of 2020, retail trading volumes reached extraordinary levels. Stimulus payments, reduced entertainment options due to lockdowns, and free access to trading apps drove millions of new investors into markets. Robinhood and other platforms reported record account openings. These new retail traders generated enormous order flow for wholesale market makers.
Citadel's Reported Revenue Surge
According to public reporting, Citadel Securities generated approximately $4 billion in revenue in the first half of 2020 — roughly double its pace in the prior year. The firm benefited from increased trading volumes, wider bid-ask spreads during periods of volatility, and the surge of new retail investor activity. This revenue surge reflects the PFOF model at scale.
New Investors and Execution Quality
Many of the millions of new investors who entered markets in 2020 had no prior investing experience. They were entirely dependent on the infrastructure of discount brokers and PFOF market makers for their trading experience. These new investors were particularly unlikely to be aware of PFOF, execution quality considerations, or the market structure within which they were operating.
2020 as a Turning Point
The 2020 retail trading boom set the stage for the January 2021 GameStop episode and the subsequent national conversation about market structure, PFOF, and retail investor protection. In retrospect, 2020 was a period when the scale of PFOF-dependent retail trading reached a level that made its dynamics impossible to ignore. The regulatory response — or lack thereof — is part of the ongoing story of market structure accountability.