Global Online Investing Industry
The global online investing industry (part of the wider online finance sector) provides for self-directed investing, allowing traders and investors to use online services to invest. An increasing number of brokers offer unique trading platforms online, giving investors a convenient way of following global financial markets. Successful investors need to have precise knowledge regarding markets and investing.
Online trading platforms facilitate the purchase and sale of various securities, including mutual funds, options, equities and fixed income. Online investing is a cheaper alternative to traditional investment methods, though investors do pay commissions for online investing. The amount of these commissions depends on each individual broker and the services used.
Though online investing is highly accessible and a convenient service for investors, it does carry a certain degree of risk. Investors have to undertake extensive research to invest intelligently and to choose the right broker service. Investment fraud represents a significant obstacle to industry growth, along with the threat posed by identity and information theft.
Security will dictate industry growth to an important degree moving forward, with increasing pressure on brokers to cut down the risk to the consumer of providing financial information online. Consumers are increasingly vigilant due to rising awareness of the risk involved. Investors also have to be sure to verify the credentials of any brokers or company they deal with to minimize the risk of fraud.
Investors willing to carry out research can turn the internet into an important investing tool. The US Securities and Exchange Commission helps the US online investing industry by maintaining an online complaint center that tries to identify fraudulent online financial outfits. The North American Securities Administration Association and the National Association of Securities Dealers are also involved in seeing that industry players adhere to the guidelines in place.
Online investing activities are affected by market highs and lows, and the global economic environment. While investors can consult their online investment accounts at any time, real-time investments and trading remain constrained by stock market hours in the same way as traditional investing.
Leading online brokers currently operating in the online investing industry include Scottrade, IDealing, Fidelity, TD Ameritrade, and E*Trade. Hybrid brokers such as Schwab combine traditional investing with online investing, providing their customers with both brick-and-mortar brokerage houses and online trading.
Online Investment Industry Trends
Just as rising internet penetration helped to develop the online investing industry, other factors such as social media and mobile internet are now contributing to the expansion of this sector. Consumers are accustomed to having internet access at all times, leading to the need for online investing outfits to innovate to keep up with this constantly evolving channel. Online investing companies are faced with the need to customize online trading, providing consumers with personal accounts that vary in nature depending on the customer’s specific aims and requirements. For example, customers can choose a specific location, market, trading tool and benefit from specific news and research tools they find most useful.
As seen across other sectors, apps make mobile online investing a simple option for busy customers requiring access to their accounts and financial information from anywhere, at any time. Online communities and chat forums also point to a new trend in the industry, with customers using various social options to discuss their investing activities, seek advice and better understand the markets. Apart from easy access, and effective research tools, online investing also continues to attract increasing numbers of customers due to its lower cost compared with traditional brokers. Online investing outfits will continue to capture a greater share of the ever growing online customer base.
Leading Industry Associations
- The US Securities and Exchange Commission
- European Commission DG Internal Market and Services
- European Securities and Markets Authority
- The National Association of Securities Dealers
- The Financial Industry Regulatory Authority
- North American Securities Administration Association
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