From Pandemic Spike To Structural Shift: Retail Trading In US Futures Surges 50%

Futures volumes continue to grow unabated with both institutional and retail participants increasingly choosing this instrument to express directional views and mitigate the risks of other investment activities.

Interest in futures is often regarded as cyclical in nature due to corporate hedging cycles, but it's also known to be driven by periods of increased uncertainty, volatility, and by the speculative activity this engenders, as seen during the pandemic.

In the case of retail participants, could a more structural shift be taking place? Why are more retail traders flocking to this particular instrument and what does this say about the future of both futures and retail trading?

Futures trading statistics

Futures volumes continue to break records as market participants attempt to make sense of escalating geopolitical conflicts, tariff confusion, an uncertain interest rate environment, and rapid sector rotations.

Back in January, it was reported that in 2024 the top 150 global futures contracts experienced a 16.7% uptick in traded notional value, the best performing of which were precious metals and foreign exchange (up 26.5% YoY) followed by interest rate and equity futures (up 20.7% and 17.4% YoY, respectively).

In February, Intercontinental Exchange (ICE) broke open interest records on its futures and options markets with over 100 million outstanding contracts. CME Group reported record-breaking trading activity in the same month, with over $67 million contracts traded.

This activity spans the retail-institutional divide, with CME recently reporting record average daily volume (ADV) on its Micro E-mini Futures, which it hailed as being "the most actively traded and deeply liquid index products."

Micro E-Mini contracts are particularly appealing to retail investors owing to their smaller sizes, making them more affordable. The trading of these contracts is up 35% compared to 2024, with an ADV of 3.3 million.

CME Group also recently reported record-breaking futures volumes in May, with a new average daily volume record of 28.9 million contracts representing an impressive 11% year-over-year jump.

While a great deal of this activity may be explained by the global uncertainty that's unique to this moment in time, there do seem to be some interesting changes taking place that suggest the industry as a whole is positioning itself for more retail participation to come, such as the anticipation of more crypto-friendly regulation in the US.

Retail futures-related M&A activity

In March of this year, Kraken, one of the world's top ten cryptocurrency exchanges, announced its purchase of US retail futures trading platform NinjaTrader for $1.5 billion. The deal will allow Kraken to expand both its asset footprint and user base, while also leveraging NinjaTrader's Futures Commission Merchant (FCM) license to offer crypto futures in the US.

In the same month, UK-based broker, Plus 500, announced its acquisition of Indian financial services firm Mehta Equities for $20 million. The purchase furthers Plus 500's expansion into international futures markets.

This follows the company's 2021 entry into the US market by acquiring Cunningham Commodities, a registered US FCM, and Cunningham Trading Systems, a fintech trading platform provider, for a total of $30 million.

Also in 2021, UK-based broker IG Group made its largest ever acquisition when it purchased the rapidly-growing US futures and options broker, Tastytrade, for $1 billion with the expressed intent of diversifying into what it deemed as the "high-growth" market of US retail futures and options.

Last year, zero-commission trading app Robinhood acquired Bitstamp, one of the oldest cryptocurrency exchanges, for around $200 million and announced its plans to offer cryptocurrency futures to US customers. This was after the company purchased Futures Commission Merchant, Marex, for $125 million at the start of 2024.

Reasons for retail

The pandemic is often cited as one of the major contributing factors for increased retail participation in both futures and options markets. The narrative that combines mass lockdowns with widespread distribution of stimulus checks is a compelling and valid one, however, a great deal of groundwork had already been laid by the trading industry for that captive audience to be able to flock en masse to futures and options trading platforms at that time.

Zero-commission brokerage is a big part of this story, the first of this new generation of app-based zero-commission brokers aimed at Millennials emerged in 2013 with Robinhood, followed later by Webull. By the end of 2019, incumbents such as TD Ameritrade, E*TRADE, Interactive Brokers, Fidelity, and Schwab had all done away with their traditional commission structures in response.

The emergence of Micro-E-mini futures was also critical. These contracts allow traders to gain exposure to index fluctuations at a tenth of the cost of traditional E-mini futures. They started trading in May of 2019 when the CME made them available on all four major US indices (S&P 500, Russell 2000, Dow Jones 30, and Nasdaq 100).

The retail prop trading phenomenon is also a part of this story. The growing market of prop firms offering paper-money trading on futures with the promise of generous payouts for best performers has enticed a whole new group of traders who may have otherwise been trading CFDs. Interestingly, futures did not contribute to the total trading volume growth of Interactive Brokers in its Q4 earnings announcement. This suggests that end users may be moving to the newer players such as Robinhood or prop trading firms.

Another element of this trend is the increasing availability of high-quality futures trading platforms geared towards retail participation and developed with a view toward the preferences of younger traders. These include web-applications over desktop platforms and mobile apps that are fully functional rather than being an afterthought, as older generations of traders were forced to put up with.

The past decade or so has also seen massive amounts of educational content created specifically for retail traders. Whether this be from brokers attempting to market their services to a wider cross section of the general public, or from content creators and social media influencers. The huge variety of trading-related content out there has led to an explosion in financial literacy and to an increased desire among the general public to have access to a variety of financial markets.

It should also be noted that futures afford retail traders a great deal of diversification in return for the effort they put into learning how this instrument works. Futures are tradable on a wide variety of underlying symbols spanning the asset universe, from commodities, and indices, to currencies, interest rates, and crypto.

Finally, retail's increased participation in futures markets also appears to be related to a fundamental shift in trading behaviors that differentiate Millennials, Gen-Z, and now Gen Alpha, from older cohorts.

Gen X and the Boomer generation were far more content to invest passively, sitting on the sidelines as they periodically added to their "buy and hold" index allocations. Younger traders have been shown to be far more active, more tolerant of risk, and to trade more often than older generations. This increased appetite for active trading coincides with the widespread availability of futures and options trading services for retail participants.

Final thoughts

The ground that was gained by retail traders during the pandemic appears to have been much more than just a momentary high-water mark. According to the CFTC (Commodity Futures Trading Commission), retail trading volumes in US exchange traded futures are now, on average, 50% higher than they were pre-pandemic. This speaks of a broader structural change that may as yet be nascent but appears to be here to stay.