ASBBS E-Journal, Volume 3, No. 1, 2007
146
EFFECTS OF ONLINE TRADING ON
THE INVESTMENT COMMUNITY
Anna Turri
Sam Houston State University
annamblack@yahoo.com
Balasundram Maniam,
Sam Houston State University
maniam@shsu.edu
Ronald Earl
Sam Houston State University
earl@shsu.edu
ABSTRACT: Online trading is one of the latest ways to invest that has gained popularity in recent years as
investors become savvier. This study discusses online trading effects on investors and brokers. It also evaluates
what characteristics most online investors share. It then examines how foreign investors are handling trading
online in their own countries. Finally, it observes the future of online investing. Overall, with the convenience of
online trading, it looks like it will increase in popularity. However, investors will have to weigh the benefits versus
the costs and see if online trading is right for them. Also, brokers must change their services to accommodate this
new breed of investors.
INTRODUCTION
With the increased use of the Internet around the globe, it is only natural that more and more products and
services are being offered over the World Wide Web. Therefore, it is no surprise that financial services
are being offered by many online companies. In fact, over the past ten years the Internet has become an
important way to distribute financial products (Vakil & Lu, 2005). The facts regarding online brokerages
show its amazing growth. The number of people investing online has increased dramatically since the
first few discount brokerage firms went online in 1997. In fact, there were only 30 discount brokerage
firms (DBFs) online in the United States in 1997 and in the span of three short years the number increased
to 200 (Yap & Lin, 2001). Also, the research firm, NFO Worldwide, located in Greenwich, Connecticut
estimates that around 6.3 million people have brokerage accounts online (Opiela, 1999).
This paper will discuss the reason for online trading’s sub