Online Trading Volume Surges 30% for Quarter
BOSTON (NYT) -- Investors executed more stock trades online than ever in the first three months of the year, as the volume of trading via personal computers rocketed 30 to 35 percent, according to an influential analyst's report.
In a study that surprised industry observers and confirmed the worst fears of traditional brokerages, Bill Burnham of CS First Boston said online brokers processed a record 440,000 to 460,000 transactions daily in the quarter, up from 340,000 in the fourth quarter of 1998, and double the June 1998 figure.
"That's a big, big number," said Bill Lauderback, a spokesman for the Houston-based Electronic Traders Association. "It's so big, it's almost scary." The increase was even higher than Burnham's earlier prediction of 25 percent growth for the first quarter. And it was "all the more remarkable" because it came while growth in all stock market trades, including those made through traditional brokers, rose just 4.9 percent, the report said. The new figures for online trading vividly illustrate the sudden popularity of Internet investing, the report said, and "indicate that the online trading industry continues to take market share" from traditional brokers. "The economy is booming, the market is booming and the Internet is booming," said Lauderback. "While that lasts, the trend is going to last." More than 7.5 million Americans now use discount brokerages online to buy and sell stock, according to industry estimates. About one in every seven trades, or nearly 14 percent, is executed online rather than through traditional brokers. Drawn by low commissions, free stock quotes and a wealth of research available over the Internet, online investors have swarmed into the market since 1997, when just in 14 trades, or 7 percent, were performed online. Much of the recent growth, however, may be related to the manic rise in Internet stocks themselves, some analysts say. A CS First Boston report issued earlier in the year concluded that the "online trading industry is a case of Internet users (often working at Internet firms) using Internet brokerages to trade Internet stocks." The online brokerages themselves have been among the main beneficiaries of the surge in computer trading. …