With the bearish trend continuing to cast a shadow over recovery in the US stock markets and retail investors reluctant to invest in stocks, online brokerage firms face a grim prospect.
It
was not long back when online trading along with e-mail
and search had become one of the most popular usages of
the Internet. The trend was visible more so in the US.
The tech boom, which led the bull run of the 1990s, saw
the proliferation of hundreds of brokerage sites
offering online trading to investors. It was a time when
day trading was name of the game that helped popularize
online investing. Led by a surge in the number of day
traders, representing those investors who buy and sell
during the same day, trading volumes touched record
highs; the average number of online trades, per day,
reached 8,00,000 during 1999 in the US. However, such
volumes were too high to be sustained for long, which
some experts had doubted at that time and what is being
exactly realized now.
With
the stock markets still reeling under a bearish trend
for the last three years in succession, all major online
brokerages are facing a slowdown in the trading activity
as more and more investors shy away from investing in
stocks. With no signs of improvement in market sentiment
amidst a weak economic outlook globally, retail
investors have increasingly become reluctant to invest
in stocks after having lost billions of dollars in
recent market crashes. All the three major online
brokerages in US namely E*Trade, Charles Schwab, and
Ameritrade have witnessed significant fall in the number
of online trading customers and are struggling to cope
up with the downturn in the market. Uncertainty has
increasingly gripped the industry as smaller online
brokerages are either closing their shops or are being
gobbled up by big fishes desperately trying to
consolidate their position to stay afloat. All the three
big players have been on an acquisition binge in recent
times. So, where is online trading headed for? |
