Syndicate
The stock exchange contracting through the Internet
Along the period of 1996-1999 the number of contracting accounts on line increased from 1.5 millions to about approximately 10 millions. The percentage of securities traded through the net between retail and wholesale operations passed during this period from an approximately 5% to almost an 18%. If you only take into account the retail operations, the markets quota is even higher, 30%.
From the beginning of the contracting online (around 1994) the number of stock exchange agents that operate on the cyberspace has gone from one to more than 100 and it is foreseen that this number will double in the next two years.
For many of these online investors, the cost has been the main attraction. In this sense it is good to emphasize that during 1999 the average cost for an operation through the Internet descended up to 15.75 dollars. However, not all is what it seems, due that at least 50% of the new online investors are clients of discount agencies which have only changed the channel in which to operate.
An extended mistake among the online investors is that they think that they are doing an operation directly through the computer. Nothing so far from reality! Practically all the orders transmitted through the net foes through the contracting departments of the stock exchange agencies before being sent electronically. As with all the new technology, the stock exchange contracting online also suffers from a series of own problems. The abundant availability of information makes believe to many new investors that they are versed in stock exchange knowledge which they are not, giving place for them to make risky and speculative investments, in order to contract with good judgment and knowledge of cause.
As it often happens, the advancement of technology overcomes the capacity to comprehend it and to regulate it. This has propitiated that the main net of nets has been flooded by fraud cases and by all the inconveniences inherent to the telemarketing operations. Neither have the technical problems been completely forgotten as shown by the many of the technological stops motivated by the saturation of the servers of the stock exchange agencies during critical periods of activity.
According to a recent survey, more than 11% of the online investors said that once or more times a week it was impossible for them to communicate themselves with their online stock exchange agent. Other worrying problems have to do with that of the service to the client and with the protection of coded data. The same as have the net pirates (hackers) have put in evidence more than once that no system is neither flawless nor totally immune against hackers.
The contracting online brings other human failures. In effect, the lack of an immediate execution of the orders or of crossed messages have given place to multiple executions of the same order, with which the client was charged with much higher sum of money than it was one and thus amplifying its loses before even being informed of the problem. The SEC has established an office whose mission is to supervise the online stock exchange operations.