During a recent interview with Barbara Walters, entertainer Barbra Streisand revealed her enthusiasm and love of online trading. She admitted she spends a majority of her free time making money, and, when asked by Walters about a rumor that designer Donna Karin had entrusted money to Streisand to trade for her, Streisand admitted the successful designer has given her $1 million, an amount she had doubled in six months. Streisand’s enjoyment of electronic trading is symbolic of the growing popularity of electronic trading from everyone to the most savvy Wall Street broker to the most inexperience, first-time, investor. However, there have been many barriers preventing electronic trading from becoming more established than it has by now, including fear, and a lack of investor confidence as well as worries over transacting financial trades electronically. This analysis will discuss the phenomenon of electronic trading, while reviewing some of the barriers that have prevented it from becoming more established than it has up to now. A conclusion will address the life-cycle stage of the electronic trading industry as being partly responsible for its slow establishment.
Electronic trading is an idea whose time has come. A booming economy, tales of overnight success in the roaring stock market, and the advent of more secure and reliable forms of technology have prompted thousands of individuals to open electronic trading accounts, either through established reputable conventional brokerages or through new Internet start-ups like E*Trade and Ameritrade. However, despite tales of get-rich-quick investors who began with thousands and soon had millions, there are three main barriers to electronic trading that have prevented it from being more established: 1) Investor fear and ignorance; 2) SEC and other regulations and legislation; and 3) Inefficient integration of technologies. As we shall see in our examination of these barriers to...