Online stock trading is set to soar in Europe, with the number of accounts expected to grow from 1.85 million at the end of 1999, to 4.4 million by the end of this year, according to figures from research group IDC.

By 2003, it is expected that the figure will rise to 16.8 million. "Europe is now in the stage of rapid online trading account growth," said Luisa Bordoni, vice president of IDC's European Vertical Market Research.

"During this take-up phase, brokers must focus on surviving by gaining enough market share to become sustainable players," she said.

IDC said lessons should be learned from expansion in the US market, where many companies have struggled to keep up with immense growth and the resulting competition.

"Companies that are first off the block can gain significant market share at this stage of rapid market growth, and the biggest challenge could well come from start-ups rather than from traditional institutions," Bordoni warned.

"To date, online brokers have competed on price, although as the market develops and competition intensifies, they will focus on offering value-added services such as research and information, either as a service offered directly or through partnerships.

"Some are also likely to integrate other services, both financial and non-financial," she said.

The UK online trading market, however, has been surprisingly slow to develop, according to IDC, although it still has the largest number of European online brokers.

IDC said this may partly be due to early UK enthusiasm for internet technology, helped by a common language with the US and the infiltration by the large US discount brokers, most of whom see the UK as the most popular point of entry into Europe.

First appeared on accountancyage.com