ced to evolve as well.Statement of the IssueDue to the high volume of trades conducted via the World Wide Web, several problems have been encountered regarding both the application of current trading laws to cyberspace and the integrity of internet users with regard to the brokerage industry. The Securities and Exchange Commission has recently published a report concerning on-line brokerage, which attempts to determine what the place of the brokerage firm will be in this Internet scenario, and what measures can be taken to regulate the transactions conducted on the world wide web. Many of the problems encountered with the advent of the Internet are analogous to those in conventional trading, and are addressed by existing laws and regulations. However, the Internet also presents unique situations that will require new methods of surveillance and enforcement by the regulators. First, there is the issue of computer systems: how to ensure that a firm’s system has enough capacity to handle the marked increase in the number of investors that the Internet has generated. Second is a given firm’s obligation to execute a customer’s trade at the best monetary terms readily available(known as the “Best Execution Responsibility”). Third is the application of the suitability doctrine , which requires a broker to recommend to his/her customer only those investments that are deemed “suitable” for that individual. Fourth is the general concern over privacy of investor’s personal information, and the ability of a firm to ensure it. Last is the issue of insider trading and fraud, and the regulatory issues concerning these problems.DiscussionFirst, there is the issue of systems capacities. In the past, many systems have suffered from things such as delays and outages, causing serious customer concerns over reliability. Firms will be forced to issue disclosure statements regarding the reliability ...
