NYSE President Stacey Cunningham said Friday that individual investors participated extensively during the market's record rally, in which the S&P 500 rose 48% from the March 23 low.
"The retail investor has been an important part of the market for several reasons in recent months," said Cunningham in CNBC's "Squawk Box". She highlighted several reasons for the surge, including no-commission trading platforms and consumers who have more time to place orders at home during the coronavirus pandemic.
"They are participating in this enormous recovery from the market," she said.
Their comments come after e-brokers TD Ameritrade and Interactive Brokers posted record retail sales in the second quarter. Some, including Social Capital's Chamath Palihapitiya, have said that advances in technology and greater levels of transparency have balanced the competitive environment between retail and financial professionals.
Cunningham said that while it is great to have such high levels of participation by retail investors, they also need to understand the risks before they hit the market.
"I am very pleased that retail investors are getting involved in the market, but I am also concerned if they do not do this with information and do not understand the risks involved because you certainly do not want to see private investors. You will be hurt because of them didn't understand that markets can go both ways and they can go fairly quickly, "she said.
Another market phenomenon this year was the increase in special purpose vehicles. SPACs, also known as blank check companies, collect money during IPOs to ultimately acquire a private company.
SPACs raised a record amount of capital this year, with Bill Ackman's Pershing Square Tontine Holdings becoming the largest in existence when they raised $ 4 billion through their IPO on Wednesday.
While some have argued that SPACs are an indictment of the traditional IPO process, Cunningham said they are attractive because they offer investors and companies alike, but would not replace the traditional IPO.
"It offers another way for the public, which is good so that private investors are not denied the opportunity to invest in the most exciting and dynamic companies that are coming onto the market, so we'll see more of it." We will definitely do it, "she said.
Cunningham noted that first day pops can be frustrating for newly listed companies and SPACs are attractive because they offer a little more control.
Amid the boom in investor interest, she said she received weekly calls from business people interested in launching a SPAC.
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