Page 38 - DIY Investor Magazine | Issue 38

Aug 2023 38
DIY Investor Magazine ·
TRADITION AND INNOVATION CAN RUB SHOULDERS
Innovation is borne out of adversity. Countless technological breakthroughs – including radar, jet engines, and nuclear power – emerged from research conducted during wartime. In turbulent times, the appetite for innovation, and the desire simply to change things for the better, is particularly high, but the rate of adoption can often be slow. Nowhere is this uneasy relationship between tradition and innovation more apparent than
within the investment industry – by Richard Latter The concept of owning shares in publicly-traded companies –
via specific stock ‘markets’ - can be traced back to the 1600s.
‘ELECTRONIC TRADING HAS HELPED MAKE INVESTING MORE ACCESSIBLE, EFFICIENT, AND GLOBAL’
For centuries, buying and selling shares in the UK was the
preserve of wealthy individuals and the ‘merchant classes,’
These online platforms give investors all the information they
as well as early institutional investors. As more companies
need to make informed decisions allowing them to access a issued shares and stock markets evolved, investing became
wide range of stocks, track real-time market data, view research more accessible to a broader number of investors. But you
and analysis, and execute trades directly through these
must fast-forward to the 1980s to when investing truly became
platforms. These options also, increasingly give investors the widespread.
option to hold their shares portfolio within stocks and shares
BIG BANG THEORY
In 1986, the ‘Big Bang’ removed some of the restrictions and barriers to investing that had been in place for generations. One of the biggest changes was the introduction of electronic trading systems which revolutionised the process of buying and selling shares. Electronic trading has increased speed, efficiency, and transparency in the markets. While share certificates still exist, most UK shares are now held in dematerialised form and are settled in CREST, a UK-based central securities depository. We have come a long way since investors had to rely on their high street bank or a full-service stockbroker firm to execute trades. Overall, the advent of electronic trading has helped make investing more accessible, efficient, and global.
ONLINE BROKERS AND REAL-TIME DATA
Today, individuals can open online share accounts within minutes and trade shares directly through user-friendly platforms such as Hargreaves Lansdown, AJ Bell, and Interactive Investor.
ISAs and/or SIPPs.
Innovative, newer entrant Primary Bid compliments these online platforms, giving all investors fair access to initial public offerings (IPOs) and public company fundraises, at the same time and price as institutional investors.
Platforms also now offer a range of enhanced features
for investors including dividend reinvestment plans, stock screening tools – including basing investment decisions on environmental, social and governance (ESG) criteria.
These platforms also give their clients the opportunity to apply for shares in IPOs alongside institutional investors. Clients can express their interest and submit applications for shares through the platform, and if successful, they are allocated shares at the IPO price.
‘IT MAKES INVESTING IN A RANGE OF DIFFERENT ASSET CLASSES A FAR MORE DEMOCRATISED PROCESS’