Electronic Brokerages for Online Investing

Source: Electronic Markets, Volume 9, Number 1, 1 April 1999 , pp. 32-36(5)

Publisher: Routledge, part of the Taylor & Francis Group

Buy & download fulltext article:

Price: $50.43 plus tax (Refund Policy)

Abstract:

Electronic brokerages provide 'do-it-yourself' investors with ready access to information and financial markets, changing how orders are submitted and reported. Although commissions have reduced dramatically, there is little evidence that the total cost to consumers has also lowered dramatically. This paper explores some aspects of the use of electronic brokerages (e-brokerages) that may not be obvious at a first glance. The role of costs during online trading, such as the expectation of costs prior to trading and the observable and unobservable costs after trading, is discussed from the investors' perspective. Despite changes to the order submission process, many of the processes critical for market efficiency remain unaltered. The lack of transparency in how electronic brokerages execute transactions may hide unobservable costs. There are numerous ways by which electronic brokerages coordinate with market-makers with different cost implications for market participants. Some of the arrangements may not be in the best interest of the investors. Issues such as lack of advice and valueadded services (e.g. year-end reporting services), market fragmentation and institutional regulations also impact investors' costs.

Keywords: ONLINE; TRADING; TRANSACTION; ELECTRONIC; BROKERAGES

Language: English

Document Type: Research article

Publication date: 1999-04-01

More about this publication?