The Role of Electronic Networks in Online Investment: A pilot study

• Chief Investigators: Dr Kirsty Williamson

• Collaborators: Professor Dimity Kingsford Smith, Professor of Law, Monash University

• Funder: Monash University Small Grant ($10,000); Monash University Law Faculty ($3,000)

This project seeks to explore the role that electronic networks might play in assisting online investors to invest safely and efficiently. A particular focus is on how an electronic network might be structured to meet both the needs of participants and, at the same time, minimise the legal pitfalls which may face an online broker who attempts to foster an electronic network of clients. The key question is: What are the information and advice needs of investors which might be met by an electronic network and how might factors such as investment knowledge and experience affect these needs? It is hypothesised that a large electronic network can be structured to take user needs and interests into account and that this will assist a broker from a legal perspective, given that there are virtually no statutory rules governing electronic networks for investors.

Aims of the project

• To investigate how online investors find information and gain advice at
present.

• To examine how these investors found information and gained advice
before they began trading online.

• To explore the relationship between online and off-line advice and
information for online investors.

• To profile the information and advice needs of investors which might be
met by an electronic network.

• To examine how years and type of investment experience, investment knowledge, occupational experience with finance, formal financial training experience, and other socio-economic factors such as gender, age and residential location affect these needs.

Method

The fieldwork involved:

• Individual interviews with 12 retail online investors, purposively selected to reflect a range of variables, as outlined above. Interviewees were recruited through a supportive online broker and various investor associations.

Current Status

The project is completed.

Short Report

'The Role of Electronic Networks in Online Investment'