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It’s an exchange, it’s a broker, no it’s a Jiway

Online Equity Trading

The decision of OM Group and Morgan Stanley Dean Witter (MSDW) together to invest ?100 million in a screen-based, electronic, cross-border stock market called Jiway is yet another indication of the huge potential growth of online retail stock trading in Europe.

Private client stockbrokers in Europe have seen huge growth in volumes of retail orders through the internet in recent months. So far, much of this has been in domestic markets. Yet there is no logical reason why retail investors in the UK should not invest with equal enthusiasm in German shares, or even American shares. The obstacles are fragmented national stock market structures and all the associated costs. Private client stockbrokers which may be very active in one European market, are often fearful of the expensive infrastructure required to set up membership in eight more exchanges, each with different clearing and settlement systems.

"On the retail side, the per trade cost is really important. High costs are a real inhibitor of retail volume. In the institutional equity business, we and every other broker might complain about the costs of dealing on many European exchanges," says Jerker Johansson, chief operating officer of MSDW's institutional equities division, "but it's not as if volumes would double if trading costs halved."

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