Document Type



Korea has recently experienced explosive growth in online stock trading, to the extent that the country is now one of the global leaders in this area. In this paper, we examine the implications of this phenomenon on the competitive environment facing retail brokerage firms in Korea as well as their potential strategic responses. Online trading entails low entry barriers and more demanding customers, and thus creates intense competitive pressures. Only those brokers that adapt their business models flexibly and quickly to the new environment, in particular by relying more on customized, fee-based services and less on trading commissions, will make the grade. Although our study is focused on Korea, most of its lessons, particularly those relating to strategic responses for brokers, are applicable to other markets as well.