World Brokerage and online share trading

In the fragmented market of shares, leading players, apart from small participants, compete on the basis of low brokerage fees and customer service. Though it still has a long way to go a long way, yet online share trading has established its foothold in the metropolitan cities, all around the world. This blog-post analyzes the world retail brokerage industry, taking into account the health of the capital markets and new developments in online trading. 

Electronic or online trading emerged as a platform, bringing buyers and sellers together, creating a virtual marketplace. Compared to Western countries, online trading in developing nations are still in its infancy, referring to screen-based trading in equity stocks, including bonds, FOREX, and derivatives of all genres. The dematerializing of shares, coupled with the extended reach of internet has been the fuel for the online trading, which is now a substantial part of stock market habits. 

The world retail brokerage industry consists of companies that primarily act as agents for selling or buying securities on a commission or transaction fee basis. This industry is reasonably large and fragmented with many odd brokers in cash segment and countless sub-brokers. Key developments in this industry included noticeable expansion in distribution with greater diversity offered in financial product and an emphasis on proprietary research output. With increasing appetite for equities among investors, the convenience of online trading is a growth driver for the retail brokerage industry. 

Internet share trading is here to stay and will only grow to bigger proportions, penetrating deeper into the economy. Services provided by brokers are homogeneous with very low product differentiation, which means traders are fortunate to enjoy a greater bargaining power. Most of the brokerage houses are moving towards consolidation with the smaller ones becoming either franchisees for the larger brokers or closing operations. Since there is an increasing demand for online trading, many foreign banks like ABN Amro and others are likely to join brokerage industry in developing countries.