ONLINE TAKES OFF

Sure, their impact remains tiny compared to big institutional traders’, but online investors increasingly moved the prices of stocks, particularly those in the technology sector. And the trend will only accelerate

It “was the year of the self-directed empowered investor,” says Alan Alper, an analyst with Boston consultant Gomez Advisors. “For the first time, we saw that online traders can actually move the markets.”

The number of online trading accounts jumped to 6.8 million last year from 4.1 million in 1997, and is expected to rise to 10.3 million by 2000, according to Mr. Alper.

Online trades accounted for 24% of all retail trades in 1998, up from 17% in 1997, and could reach 40% in 1999, predicts Mr. Alper. The number of Internet trading firms rose to more than 100, from 27 in 1997.

This worries full-service brokerages, mainly because they haven’t figured out how to offer the service without eliminating their brokers from the process.

But outfits like Morgan Stanley Dean Witter & Co., Merrill Lynch & Co. Inc., Prudential Securities Inc. and Paine Webber Group Inc. think they have an answer. All say that by the middle of 1999, they’ll allow customers of their fee-based managed account programs to trade electronically on their own.