bypassing stockbrokers 5% of the value of the order. Thus, discount broker, K. Aufhauser & Co., took the ability to tradeonline over Tewer personnel, and the cost savin y bypassing stockbrokers. The offering allowed Aufhauser to operate witht o customers in the form of lower commissions. At first, online trading was nothing more than a curiosity, but several thing changed this. First, the Internet started to make and inreads into the homes of individu Americans. Second, withina short space of time vast amount of investment information was being offered in the Internet. Individual investors soon found that they could go to sites such as the Motley Fool at America Online or Yahoo's finance site and get much of the information that they needed to make informed investment decisions No longer did they have to call their Stockbrokers to ask for information. Third, a number of small companies quickly followed Aufhauser's lead and took advantage of the Internet to offer their clients online trading for commissions that were significantly below those offered by full-service stockbrokers in the physical world. Finally, the market drew ever more individuals into the stock market, particularly young people, who were drawn to investing in order to build up funds for retirement. Increasingly, these newcomers set uponline trading accounts. The effects of these trends were
dramatic. By mid 2000.150 firms were offering online tradingover the Internet. Many of these companies did not even existsix years before. The arrival of the Internet had lowered barriers to entry and allowed these companies to enter the stockbrokerage industry and compete against established brokers. As the competition for the business of online investors started to heat up, commissions started to fall. By early 1999, online brokerages such as E*Trade were chargingdeep discount foes of $14.95 per market order for trades of up to 5000 shares. Thus, whereas an order for 1,000 shares ofstock trading at $20 a share could cost the client of a full-service broker as much as $500 in commission, the same trade could be executed over E*Trade for $14.95! Attracted by such low prices, from little more than a trickle in 1994, the volume of online trades grew to account for 40% of all stock trades by individuals as of mid- 2000. Discount broker Charles Schwab emerged as the leader of this new segment, with eight out of ten online trades in 2000 being executed by Schwab. At first, full-service brokers derided online trading as dangerous and justified their high commissions by claiming that they offered their clients sound financial adviceand proprietary research reports. However, with as many as
As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.
Temple University Fox School of Business ‘17, Course Hero Intern
I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.
University of Pennsylvania ‘17, Course Hero Intern
The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.
Tulane University ‘16, Course Hero Intern
Stuck? We have tutors online 24/7 who can help you get unstuck.
Ask Expert Tutors
You can ask
You can ask
You can ask
(will expire )