Online-Brokerage - Transforming Markets from Professional to Retail Trading

In this paper, we discuss different concepts for transforming professional trading mechanisms for the increasing market of private investors. Different perspectives of this fundamental change in capital markets are discussed. The driver of these changes is IT: technological progress provides new ways for private investors to participate actively in the capital markets in order to take advantage – and risk – in the area, where traditionally only professionals could realize their chances. Starting from these observations, one of the most important success factors for Online-brokers is discussed, namely that of the integration of the various phases within the “market transaction process“. Some already existing concepts in this area – going along with new forms of intermediation – are evaluated on the basis of the requirements of the different groups mentioned above. Beyond that, the integration level within the market processes serves as a clear framework for further development of IT support of trading activities in Onlinebrokerage. The concept of an Internet based electronic trading system is presented as a promising way to transform professional trading activities to the needs of private investors in the future.1