Morgan Stanley Wants to Woo the Day-Trader Crowd

Day traders seem to love a good economic crisis, which may be why Morgan Stanley is doubling down on the group.

On Monday, just a couple weeks after its E*Trade platform recorded one of its highest-volume trading days in history, Morgan Stanley announced plans to launch Power E*Trade Pro. Think of it as a souped-up, all-in-one platform for day-traders.

Day-Trading Places

Morgan Stanley bought E*Trade for $13 billion in 2020, just in time for the pandemic-fueled retail investing boom and marking the largest acquisition for any major US bank since the Great Recession. Now? The space has only grown in relevance; earlier this month, a JPMorgan report estimated that individual investors hold as much as 60% of US equities, an all-time high. 

Just how important E*Trade is to Morgan Stanley is difficult to discern (the bank has not disclosed specific financial or user figures for the platform since the 2020 acquisition) but evidence suggests that it’s a pretty good time to be in the retail trading business:

• The trade war has been a busy time for day traders. April 4 and April 7 marked the two highest-volume trading days for E*Trade in three years, Morgan Stanley’s wealth management head Jed Finn told Bloomberg. And as a broader market rout rocked US equities in the first quarter, retail investors poured some $67 billion into US stocks in an attempt to buy the dip, per VandaTrack data.
• Meanwhile, in a February earnings call, E*Trade competitor Robinhood reported a 236% increase in transaction revenue — fees for facilitating trades — in its most recent quarter, as well as a $916 million profit.

Crypto Crunch: Robinhood already offers a premium platform, Legend, that Power E*Trade Pro is set to compete with. The E*Trade competitor also credited much of its recent success to the successful integration of crypto trading on its platform, which E*Trade has yet to do (though it may be considering entering the space, according to a January report from The Information).