And what's more there are some out there who think we need a babysitter to protect us from ourselves..<g> How about a Daytraders Anonymous..hehe then we can all go to DTA meetings..
BOOM IN ON-LINE DAY TRADING SETS STAGE FOR LONG TERM REGULATORY DEBATE ON INVESTOR PROTECTION
By John Dawe
In a report yesterday from CNNfn, CS First Boston Analyst Bill Burnham
forecast that Internet brokerages will process a record 425,000 trades a day during the first quarter of 1999. This represents an increase of about 25% over the 340,000 trades per day processed during the fourth quarter last year and is characterized as a conservative estimate. Burnham also sees Internet trading volumes following a greater growth rate for the second quarter, even in the face of more service glitches recently at major on-line brokers.
A major question which is emerging regarding on-line trading is whether existing regulatory compliance procedures offer investors - and society - sufficient protections.
This issue is being raised primarily in respect to on-line day trading, which has in the past short while become a profession for some and an obsession for others. The standard relationship between broker and client is different from Internet trading because it naturally creates an environment in which the broker is more likely to fulfill the primary regulatory edict of ‘know your client'. In the forum of on-line trading, where an individual can anonymously enter buy and sell orders at will, there is generally no interaction with an investment professional. This absence of interaction with another knowledgeable person who might offer counsel to “put on the brakes” is a serious issue that will become more and more prominent as the on-line investment community continues to grow.
As any small cap investor knows, stock trading is an exciting and
exhilarating pursuit that can become an all consuming passion when a
favorite stock is ‘in play'. Unfortunately for some however, this passion spills over into the same type of obsessive illness suffered by the compulsive gambler. In these cases the on-line trading terminal becomes akin to a video poker machine which can exhaust money and destroys families and lives. Under this scenario, ‘investment' decisions are made without proper care and consideration of facts and research and the process simply becomes a gambling game.
Unfortunately, there are no simple solutions to this issue. It is clear that the new medium of the Internet has created new challenges and a balance must be struck between competing considerations. It is likely that the regulatory process will go through a variety of incarnations before a framework is created which does not impede the on-line trader, but does ensure that he or she receives an adequate level of investor protection.
This issue is far from insignificant because it is these protections which have been the underpinnings of the success of North American capital markets during the last 65 years.
To access reports relating to this story you may wish to try the following hyperlinks:
cnnfn.com
msnbc.com
cbs.marketwatch.com |
