Goldman says new day-trading rules set up volume tailwind for Robinhood, others

Goldman Sachs analyst James Yaro notes the SEC approved a FINRA proposal to amend and remove pattern day trading rules. Specifically, this removes the need for a trader to hold $25,000 in equity if they were flagged as pattern day traders, and replace this with intraday margin requirements. The firm points out that as this likely reduces margin requirements for traders, which would allow more smaller-sized accounts to trade more actively, this could drive increased retail trading volumes in equities, which could benefit brokers under coverage, including Buy-rated Robinhood (HOOD) and Interactive Brokers (IBKR) and Neutral-rated eToro (ETOR). This could be particular true for the former, which has a smaller average account sizes and mostly U.S. exposure, whereas Interactive Brokers has larger average accounts, and eToro is predominantly non-U.S. exposed.