June 22, 2001	atimes.com

Oceania Online stock trading on the increase SYDNEY - Traditional stockbrokers are feeling the pressure from the burgeoning popularity of online share trading as investors clamber to find cheaper ways to trade, new research shows. A survey by Internet research company consult.com of 35,000 Australian Internet users found that the number of active online share traders had reached 275,000 by September of last year. About 110,000 were using one of 30 online brokers to buy and sell stocks at least once a month, with the price per trade being one of the main factors influencing their decision to trade on the Internet. The number of online shareholders who used the Internet exclusively to trade stocks had also surged to 50 percent by September from 26 percent in March 2000. Consult.com's brokerage analyst Mark Johnston says he expected investors would continue to migrate from traditional, full-service stockbrokers to online trading as they became more familiar with using the Internet. "A lot of it is simply price driven," says. "The full-service brokers really have to figure out where they can add value and how to charge for that." Johnston says consult.com's research also found that three-quarters of online share traders were male and were mainly high income earners. However, there are signs of growth in the number of blue collar workers signing up with online stockbrokers. There was also a flow-on effect to online share trading sites from people using internet banking. More than 80 percent of online traders have an account with one of the four major banks, Commonwealth of Australian Bank, National Australian Bank, ANZ Banking Group or Westpac. "The big banks in Australia are really in the driving seat for online share trading and in a strong position going forward," Johnston says. As well as offering cheaper prices to trade shares, online sites are also considered attractive by those surveyed because they are easy to use and secure. However, Johnston says there is a growing demand among online traders to get access to information on companies and initial public offerings. "Online traders also want more services as well as price. They want more for less money," he says. "People want to make their own decisions. Online traders don't necessarily want someone to tell them how to build their portfolio." Johnston adds that he believes online brokers will be forced to keep their fees for trading at the lower end of the market due to the massive competition within the industry. Another factor is that most online traders have relatively small portfolios, and half of all trades are worth less than US$5,000. Even a small increase in commission fees would translate into a hefty charge for such small transactions, percentage wise, he says. Online brokers will then have to look at how to get people to trade more often or provide them with a range of financial services in order to generate more income, Johnston says. (Asia Pulse)

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