The development of regulations, changing investing philosophies, and technological progress are all intriguing stories told in the history of online share market trading. Let us go into the historical background of trading shares online:
💡Table of Content
➥ Traditionally traded stocks and early stock exchanges
Share trading has decades of history behind it. Established in 1602, the Amsterdam Stock Market is regarded as the first official stock market.
Trades were conducted in person by traders before the invention of computerized trading. Trade floors were alive with activity, with dealers yelling orders or indicating with their hands to complete deals.
➥ Electronic Commerce: Creating the Foundation for Online Commerce
The development of electronic trading systems in the 1960s and 1970s marked the beginning of the path toward internet trading. Orders may be processed electronically, increasing efficiency and transparency, thanks to early electronic trading systems like the LSE's SEAQ system and the NYSE's DOT (Designated Order Turnaround) system.
➥ Online Brokerage Services' Inception
The development of the internet, in the 1990s was a watershed year. Individual investors are now able to purchase and sell shares directly from their computers thanks to the introduction of online brokerage services by companies like E*TRADE and Charles Schwab. This change made trading more accessible to a larger public and democratized it.
➥ The Dot-Com Bubble and Collapse
The advent of online trading platforms contributed to the dot-com boom that occurred in the late 1990s and early 2000s. The stock market had notable declines in 2000 due to the fall of the technology and internet bubble, which had driven up prices via speculative investments.
➥ Advancements in Technology and Regulations
To enhance investor safety and market transparency, the Securities and Exchange Commission (SEC) implemented laws, such as the National Market System Regulation NMS (National Market System) in 2005. The purpose of these rules was to improve market efficiency and competitiveness.
High-frequency trading (HFT), which relies on algorithms and quick execution to profit from minute price swings, first appeared as a new trading method in the middle of the 2000s. Because of its possible effects on market fairness and stability, HFT has generated criticism.
➥ Mobile and zero-commission trading's ascent
The emergence of mobile trading applications like Robinhood in the 2010s increased accessibility to investment. A new wave of individual investors was drawn to these applications because they provided commission-free trading. To stay competitive, traditional brokers adopted a similar strategy and started offering trading with no commission.
➥ Trends Now and Potential for the Future
Online share market trading will still be changing in 2024. Future developments in online trading include trends like social trading, robo-advisors, and artificial intelligence (AI) integration. The conventional financial environment may potentially be disrupted by tokenized securities and blockchain technology.
The history of online stock market trading shows how it has always been improving and changing. Technology has made investing easier for everyone and changed everything from the early trading floors to the start of online and mobile trading platforms. Online trading will have a bright and interesting future as new technologies continue to grow.
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