Issues the Brokerage Industry Faces

Problems faced by the brokerage industry What kind of regulatory issues do the brokerage industry face in the advent of individual investors and online securities trading? More than 500,000 people a year. The US Securities and Exchange Commission (SEC) expects assets of online securities companies to reach $ 3 trillion in 2003 from $ 415 billion in 1998.

Online mediation industry is relatively new. However, the traditional retail brokerage industry has existed for a long time. Because most securities companies or individual brokers work in financial services such as stock exchanges, mutual funds, insurance and real estate, online brokers may gain some attention. The development of the Internet and the World Wide Web made this possible. Since then, with the development of information technology, the industry has been rapidly developing and has become one of the most successful uses of e-commerce (Bakeos et al. 2005).

The enthusiasm in the intermediary industry is not as concentrated as the mutual fund before the Internet became the language of everyday life. People now pay much attention to online investment in the securities industry. Online investment has just begun to expand at astronomical speed. As PCs become an important part of their lives, consumers are beginning to manage their portfolio online. As these Internet companies enter the market, full-service brokerage companies may now face competition from competitors in cyberspace. Consumers are facing increasingly lower transaction prices with the rapid increase of new companies in the industry. Like other industries, technology is becoming increasingly important, so various changes will occur. Due to industry structure and the behavior and performance of companies within the industry, people can understand where this industry may develop.

Long-term investment is an industry aspect that online brokers are concerned about. In order to compete with full-service brokerage firms, online brokerage companies have to enter the long-term investment field further. Low transaction costs of online mediation attract many investors seeking rapid profits. These investors assume more risks because of their lower risk. Most accounts of online brokers are worth more than most full service accounts. To prove this, let's think of Merrill Lynch once more. It claims that they have nearly $ 500 billion in assets under management. At the beginning of 1998, all online securities companies managed assets of only $ 120 billion. Merrill Lynch is just one of the leading full service brokerage companies. The assets of Smith Barney and Lehman Brothers still have billions of dollars.