Photo by Tech Daily on Unsplash
- Retail investors made up roughly 20–25% of total U.S. stock market volume as of 2024, up from around 10% in 2019 — a share gain of 10 to 15 percentage points, or a doubling to two-and-a-half-fold increase in five years.
- Robinhood earned approximately $1.4 billion from payment for order flow in 2021, the revenue line that funds the zero-commission model.
- SEC Chair Gary Gensler has argued PFOF creates inherent conflicts of interest between brokers and customers; the agency proposed restrictions in 2022–2023.
- The non-obvious part: a PFOF ban would not push "small investors" back into the dark uniformly. The cost lands almost entirely on high-frequency, small-dollar traders — buy-and-hold index investors would barely register it.
What Everyone Agrees On
The trade takes about a quarter of a second, and the app shows a $0 commission line. Somewhere between the tap and the fill, a market maker paid the broker for the right to handle that order. That transaction — invisible to the person who placed it — is the entire economic foundation of the modern retail brokerage.
According to Google News, which surfaced a CNBC piece dated August 13, 2026, arguing that small investors who became a major market force now risk being pushed back into the dark, the framing is that regulatory pressure on payment for order flow threatens the access retail traders won after 2019. One editorial caveat worth stating plainly: as of August 13, 2026, the CNBC URL circulated with that headline did not resolve on direct retrieval, so this analysis treats the framing as the reported thesis rather than a verified quote set. Everything numeric below comes from the broader documented record on retail trading and PFOF.
Our falsifiable thesis: if PFOF is restricted, the measurable damage will show up in retail order counts and average trade size — not in retail dollar ownership of equities — because the model that gets repriced is frequent small-ticket trading, not investing.
The Data, and One Number Nobody Runs
Start with the scale of what actually changed. As of 2024, individual investors accounted for approximately 20–25% of total U.S. stock market volume, versus roughly 10% in 2019. During the COVID-19 period some estimates put individual investors above 25% of equity volume. More than 10 million new brokerage accounts were opened in 2020 alone. This is the raw material of every "retail is a force now" argument, and it holds up.
Chart: Retail participation roughly doubled between 2019 and 2024, based on the 10% (2019) and 20–25% (2024) share estimates cited above.
Now the calculation the coverage skips. Robinhood's approximately $1.4 billion in 2021 PFOF revenue is always presented as evidence of scale. Set it against the more than 10 million brokerage accounts opened in 2020 — deliberately crude, since those are different years, a single broker's revenue against an industry-wide account count — and the order of magnitude lands somewhere around one hundred-odd dollars of order-flow value per account per year. That number is not precise and should not be treated as one. What it does is convert an abstract billion-dollar policy fight into a household-scale question: is the implicit cost of a routed order worth more or less to you than an explicit per-trade commission?
For anyone doing serious investment research, that reframing matters more than the headline dollar figure, because the answer flips depending entirely on how often a person trades.
Photo by PiggyBank on Unsplash
Where the "Pushed Back Into the Dark" Framing Breaks Down
The strongest version of the retail-advocacy case is straightforward: industry advocates argue PFOF is what makes commission-free trading economically possible, and commission-free trading is what let millions of people with small balances participate at all. The market context supports it — before 2019, commissions genuinely limited small-scale trading. Remove the funding mechanism and something has to replace it.
But "something has to replace it" is not the same as "access disappears." Consider two investors under each regime.
The first buys a broad index fund twice a month and holds. Twenty-four executions a year, no urgency, no spread sensitivity. Under PFOF, this person contributes almost nothing to a broker's transaction revenue. Under an explicit commission schedule, this person pays a small, predictable, and easily-quantified amount. Neither regime meaningfully changes the outcome of a decades-long holding period.
The second trades several times a week in small size. Under PFOF, the implicit cost scales invisibly with activity — every order carries an embedded economic transfer this person cannot see or measure. Under explicit commissions, the same activity produces a bill that arrives in plain sight and, on a small account, becomes prohibitive fast.
Which means the honest version of Gensler's conflict-of-interest argument and the honest version of the industry's access argument are describing the same person: the active small-dollar trader. That is the constituency being fought over. The buy-and-hold investor, who represents the behavior most stock analysis literature would call sensible, is close to indifferent. The rhetoric of "small investors" flattens a distinction that determines the entire policy outcome.
There is a second-order wrinkle the surface reporting rarely reaches. AI and algorithmic systems run by the market makers purchasing retail order flow have raised concerns about information asymmetry — sophisticated models can learn from aggregate retail patterns in ways an individual cannot reciprocate. At the same time, AI-powered trading assistants and robo-advisors are emerging as tools that push in the opposite direction. Both trends are real, and they partially cancel; treating either one in isolation produces a misleading read on market trends.
The Bear Case Deserves Better Than a Paragraph
The strongest objection to our thesis is that trading frequency is not a lifestyle choice — it is a function of account size. Someone with $800 cannot build a position in one order the way someone with $80,000 can. Frequent small trades are, for many people, the only path to a position at all. If that is true, then repricing frequent small-dollar trading really does reprice entry itself, and the "buy-and-hold investors are fine" argument quietly assumes a starting balance many readers do not have.
That objection has force, and it is why fractional-share availability matters more to this debate than PFOF economics do. The counter is that brokers competing for the same customers have every incentive to preserve low-friction entry through other revenue lines — securities lending, cash sweep, subscriptions — rather than reinstate a 2018-era commission wall and surrender the accounts. The 2021 meme stock episode around GameStop and AMC demonstrated something the industry has not forgotten: retail flow, in aggregate, is valuable enough that someone will find a way to pay for it.
A second objection: the SEC's proposals from 2022–2023 were part of a broader market structure package including tick size changes, not a standalone PFOF ban. Reading any single element as an existential threat overstates what has actually been proposed. That is a fair critique of the alarm framing generally.
Bottom Line and Watchlist
Our read: the probability-weighted outcome is not the return of the pre-2019 commission era but a disclosure-and-routing regime that makes the implicit cost visible — which would be genuinely useful, because a cost you can see is a cost you can compare. The number to watch is not whether commissions return; it is whether average retail trade size rises while order count falls. That combination would confirm the thesis. If retail dollar ownership of equities falls alongside it, the thesis is wrong and the access argument wins.
Three things worth researching directly rather than through headlines: the SEC's published market structure agenda, including tick size proposals; brokers' quarterly transaction-based revenue disclosures, where PFOF dependence is itemized; and FINRA and exchange data on retail participation, which is where any real change will appear before it appears in commentary. Market-structure shifts also interact with macro conditions — the same divergence dynamic Automation examined when weak jobs data split the Dow and Nasdaq shows how quickly participation patterns can shift for reasons that have nothing to do with regulation.
Frequently Asked Questions
What is payment for order flow and how does it actually affect retail investors?
Payment for order flow (PFOF) is an arrangement in which a broker routes customer orders to a market-making firm and receives compensation for doing so. It generates billions in annual broker revenue and funds zero-commission trading. The effect on an individual is indirect: rather than paying a visible commission, the customer's execution quality carries an embedded economic cost that is difficult to observe on a single trade.
Why is the SEC considering banning payment for order flow?
SEC Chair Gary Gensler has stated that PFOF creates inherent conflicts of interest between brokers and their customers, because the broker's revenue depends on where orders are sent rather than on how well they are executed. The SEC proposed rules in 2022–2023 to potentially ban or restrict the practice as part of a wider market structure review that also included tick size changes.
How did retail investors gain market influence in 2020 and 2021?
Commission-free platforms such as Robinhood and Webull removed the cost barrier starting in 2019–2020, and more than 10 million new brokerage accounts were opened in 2020 alone. Retail trading volume surged during the COVID-19 pandemic, with some estimates showing individual investors above 25% of equity volume. The 2021 meme stock episode involving GameStop and AMC then demonstrated that collective retail activity could move prices in ways institutions had to account for.
Will commission-free trading end if PFOF is banned?
Not necessarily, and this is where forecasts should be read carefully. Industry advocates argue PFOF is what makes zero commissions viable, and that claim is directionally sound. But brokers have other revenue lines, and competitive pressure to retain accounts is significant. The more likely pressure point is on business models most dependent on transaction-based revenue — worth checking in any broker's quarterly disclosures.
What percentage of stock market trading is from retail investors right now?
Individual investors accounted for approximately 20–25% of total U.S. stock market volume as of 2024, compared with roughly 10% in 2019. Figures vary by methodology and by measurement period, so any single number should be treated as an estimate rather than a fixed statistic.
Disclaimer: This article is editorial commentary for educational and informational purposes only. It does not constitute financial advice, a recommendation, or an endorsement of any security, broker, or platform, and it does not reflect independent product testing. Always do your own research and consult a licensed financial advisor before making investment decisions. Research based on publicly available sources current as of August 13, 2026.