The Internet continues to provide us with paradigm shifts that are occurring in an incredibly diverse number of industries. Online trading is one such industry.

‘The Global Financial Crisis has spurred more investors to take charge – which is why online trading is attracting 100,000 new customers every year.

From a slow start in the late 1990s online trading has ridden the boom in interest in the stock market and rising internet penetration, to the point where it now accounts for about 12 per cent of the trades put through the Australian Securities Exchange(ASX).

That’s not bad, given that the big investment banks – which do almost wholly institutional business – account for almost 80 per cent of trading.

And online broking is still a growth industry, according to the nation’s internet brokers.

‘I think online broking will add a percentage point or two to its market share every year for the foreseeable future,’ says Stuart Sayers, managing director of ETrade, the number two online broker, with 22 percent of the market (behind CommSec, which has 53 per cent.)

‘It almost has to, based on trends we see in the internet penetration and the take-up of online banking. Australia is not quite 100 per cent internet penetration, but it’s pretty close. And internet banking use grows at about 6-7 per cent a year, every year.’

‘That tells me that, one, older people are becoming more comfortable online; and two, younger people, that’s what they do with everything. Those two factors will grow in importance every year….’

‘We’re seeing about 100,000 new customers a year, and that number has grown steadily over the past four to five years – and it had a bit of a jump over the past year,’ Brian Phelps, head of distribution and margin lending at CommSec says. ‘We believe this reflects more people wanting to take charge of their investment. Two years ago, we were averaging 35,000-40,000 trades a day. About a year ago, it was averaging 50,000 trades a day: over the course of the last financial year we averaged 75,000-80,000 trades a day.’

Arnie Selvarajah, chief executive officer of Bell Direct, the online brokering arm of Bell Potter, says the average trade size on the online market has crept up to about $10,000-$12,000…

The next growth boost for the online broking industry is the access through handsets such as the iPhone. Since the iPhone was introduced in Australia in 2008, Mr Selvarajah says the handsets use has grown to the point where about 5 per cent of Bell Direct’s clients that log in each day do so via an iPhone.

The online trading market is also being boosted by the burgeoning market for contracts for difference (CFDs) in Australia now estimated at $350 million in size, and involving 35,000 investors. This market is conducted wholly online.

Source: The Australian