Online traders steal the retail market

Online trading contributed 22 per cent of all retail trading in the US in the first half of 1998, according to a report from investment services firm, Piper Jaffray.

Adrian Smith, analyst at Datamonitor, is not surprised by the figure. "Given the amount of money companies have been throwing at the whole online trading area, it's to be expected," he said.

According to Smith, traders have been quick to embrace electronic trading because it's a familiar concept to them. "Traders are not so concerned about the obvious risks associated with Internet transactions like security. They've thrown a lot of money into the systems to secure them, so they have greater faith in their reliability," he said.

The report predicts online trading will increase to 27 per cent of the overall market by the end of the year. But Smith doubts the proportion of online trading will advance towards 100 per cent in the short term, despite the willingness of financial communities to take on the technology.