Электронный бизнес = Electronic business. 2nd part. Часть 2

Министерство образования и науки Российской Федерации

Уральский федеральный университет

имени первого Президента России Б. Н. Ельцина

ЭЛЕКТРОННЫЙ БИЗНЕС. ЧАСТЬ 2

____________

ELECTRONIC BUSINESS. 2ND PART

Учебное пособие

Рекомендовано методическим советом  
Уральского федерального университета 

для студентов вуза, обучающихся по направлениям 

09.03.03, 09.04.03 — Прикладная информатика, 

38.03.05, 38.04.05 — Бизнес-информатика  

Екатеринбург

Издательство Уральского университета

2017

УДК 004.77:339.17=111(075.8)
ББК 65.42я73+32.971.35я43
         М42

Авторы: М. А. Медведева, М. А. Медведев, С. С. Парушева, К. Ц. Не-
сторов

Рецензенты: кафедра «Высшая и прикладная математика» Уральско-
го государственного университета путей сообщения (завкафедрой —  
д-р физ.-мат. наук, проф. Г. А. Тимофеева); ст. науч. сотр. Института 
математики и механики Уральского отделения РАН, канд. физ.-мат. 
наук Д. Г. Ермаков 

Научный редактор — д-р физ.-мат. наук Д. Б. Берг 

На обложке использовано изображение с сайта https://pixabay.com

М42

Медведева, М. А 
Электронный бизнес. Часть 2 = Electronic business. 2nd part : 
учебное пособие / М. Медведева [и др.]. — Екатеринбург : Изд-
во Урал. ун-та, 2017. — 132 с.
ISBN 978-5-7996-2134-6 (ч. 2)
ISBN 978-5-7996-1792-9

Учебное пособие посвящено трем основным аспектам электронного бизне-
са: «Электронные финансы», «Электронное правительство» и «Разработка веб-
приложения для электронного бизнеса».
Модуль «Электронные финансы» дает знания о теоретических и практических 
аспектах развития электронных финансовых услуг, онлайн-торговли ценны-
ми бумагами и валютой, об электронном банкинге, интернет-страховании, 
безопасности и защите интернет-банкинга. Модуль «Электронное правитель-
ство» освещает области веб-технологий, их применения в государственном 
управлении, а также разработки и управления проектами. Модуль «Разработ-
ка веб-приложений для электронного бизнеса» посвящен техническим вопро-
сам создания веб-приложений. В частности, обсуждаются вопросы разработки 
пользовательского интерфейса, создания навигации веб-приложений, верстки 
веб-страниц, работы с базами данных в веб-приложениях.
Учебное пособие предназначено для студентов экономических специальностей.

УДК 004.77:339.17=111(075.8)
ББК 65.42я73+32.971.35я43

ISBN 978-5-7996-2134-6 (ч. 2)
ISBN 978-5-7996-1792-9

© Уральский федеральный  
      университет, 2017

INTRODUCTION 

The course “Electronic Business. 2nd Part” is devoted to three impor-

tant directions in the field of e-business: “E-Finance”, “E-government” and 
“Development of web applications for e-business”. The material is structur-
ally divided into chapters and subchapters, at the end of each chapter there 
are literature and Internet sources, as well as self-study questions.

Electronic finance is closely linked with the application of modern infor-

mation and communication technologies in the financial area. The advantag-
es of Internet-based technologies significantly change the nature and struc-
ture of the financial services and allow both traditional and new providers to 
offer users an effective way of working with them.

Issues related to e-government, cover theoretical and practical aspects of 

communication Consumer electronic means with state and municipal ad-
ministration.

The module “E-Finance” provides knowledge about the theoretical and 

practical aspects of the development of electronic financial services, online 
trade of securities and currencies, electronic banking, online insurance, se-
curity and protection of Internet banking.

The module “E-government” provides knowledge in the field of web tech-

nologies and their application in public administration, as well as the devel-
opment and project management in public administration.

The module “Development of web application for e-business” covers the 

technical issues of creating of web applications. In particular, it discusses is-
sues of development of user interface, creating navigation of web application, 
layout of web pages, working with databases and web applications.

The textbook is intended for students of economic specialties of higher 

educational.

1. E‑FINANCE 

1.1. Online trading 

By online trading we mean online trade in securities and currencies, i. e. 

placing orders and closing transactions for buying and selling securities or 
currency using Internet-based platforms that have been provided to consum-
ers by intermediaries — traditional or electronic brokers (e-brokers).

1.1.1. Participants and functions of online trading

Participation of consumers in the trade of securities and currencies in the 

global capital markets is carried out through the intermediacy of brokers, which 
according to the terminology adopted by Bulgarian market are called invest-
ment intermediaries. Banks can also act as intermediaries in this market. In or-
der to place an order for buying or selling securities or currencies, clients make 
use of brokers over the counter, in their branch network, or through web-based 
platforms available on their sites — an opportunity that is the result of the ad-
vance of innovative electronic business in the financial sphere.

Traditional brokerage companies with physically existing branch network 

(brick branches) can be related to two categories of broker:

• Classical brokers, called “full service brokers” — they provide the full 

range of services: consulting clients in making investment decisions 
and legal service, maintaining a client trading account, accepting and 
executing orders for buying and selling securities, perhaps investment 
portfolio management, etc.

• Discount brokers — their major activity is intermediacy in executing in-

dividual investors’ orders, whereby they mainly serve those clients, who 
make their own investment decisions (self directed). Discount brokers 

1.1. Online trading 

provide a limited range of consultancy. Their market presence is rela-
tively high because of the lower commission rate they charge.

In the days before the Internet investors had to communicate with their 

stockbroker from traditional brokerage companies mostly over the telephone. 
The brokerage company entered the order in their system, which was con-
nected to the stock trading systems. In 1994 К. Aufhauser & Company, Inc 
(later acquired by what is today the second biggest US online broker TD 
Ameritrade) became the first brokerage company to provide online trad-
ing  1. Since then, investing online has been manifesting continuous growth. 
Investors can already enter orders for direct buying and selling securities on-
line, with these orders passing through brokers and allowing them to moni-
tor or approve the transactions. Thus the client and the brokerage company 
are protected against illegal or incorrectly executed transactions, which could 
unfavorably impact the client’s portfolio or the broker’s license. When using 
the intermediacy of an online broker clients use its e-trading platform. One 
of the most important characteristics of the intermediacy of online brokers is 
the huge reduction of expenses that clients pay for brokers’ services — their 
commissions fall dozens of times compared to those of traditional brokers.

Functions of online brokerage  2 comprise providing information about se-

curity prices and the financial state of the companies, whose securities are 
being traded; management of trading accounts; providing tools for real-time 
tracking and monitoring of security quotations and indexes for the purpos-
es of portfolio management; providing the latest news, in-depth analyses 
and reports; execution of orders for security buying and selling; settlement 
of securities at the stock exchange and other. For its services the online bro-
ker earns a commission or a fee that is considerably lower than that of tra-
ditional brokers.

Online trading in various types of securities (shares, bonds, options, mu-

tual funds, etc.) and currencies is offered to investors on the Internet by two 
basic types of broker  3:

• Traditional brokers (classical and discount ones) and banks, in the past 

offering intermediacy only offline, through their branch network and 
at present marked as brick and click brokers. Examples of such bro-

1 About TD Ameritrade [Electronic resource]. URL: https://www.tdameritrade.com/

about-us.page (date of access: 18.04.2013).

2 The English term for the provision of electronic brokerage services is online- or e-bro-

kerage and e-broking. 

3 Sahut J.-M. On-line Brokerage in Europe: Actors & Strategies // JIBC. 2003. Vol. 8. 

No. 1.

1. E‑FINANCE 

kers include Merrill Lynch  4, Charles Schwab, Ferri, Dubus, Finan-
cière Warny, BNP-Paribas, Bred and other, including derivatives of 
traditional investment companies (Fidelity).

• New electronic brokers, also known as online or e-brokers, that emerged 

especially for the purpose, and exist online, as well as some of the di-
rect Internet banks, offering investment services. Representatives of 
this type of broker are the US E*TRADE, Scottrade, TD Ameritrade; 
Cortal Consors (Germany); Avanza (Sweden); the Dutch online bank 
BinckBank N. V. and other.

The place of electronic brokers from the viewpoint of the above men-

tioned traditional categorization of brokerage companies is predominant-
ly in the discount brokers segment.

Consumers’ participation in online trading definitely depends on their 

possession of certain financial knowledge in view of the need for making in-
vestment decisions. Unlike Internet banking, which does not pose any re-
quirement whatsoever for the client using interactive banking services, par-
ticipation in stock exchange trade is based on the respective financial literacy 
necessary to do that. To a certain extent this fact is an obstacle for growing 
penetration of online investing among consumers.

Depending on their behavior in stock trading and their attitude to the use 

of Internet in stock trading, consumers are divided into three groups accord-
ing to a publication of JP Morgan  5: participating on their own (self directed), 
who manage their finances themselves and are focused on application of the 
global network; partially participating, who seek the advice of consultants on 
certain issues, delegate some decisions to consultants and do not fully use In-
ternet solutions, and those fully delegating their financial affairs to profes-
sional advisors and consultants, with no particular attitude towards the op-
portunities of online trading.

1.1.2. Advantages of online brokerage 

Online brokerage brings participants — both clients and brokers, the advan-

tages mainly associated with prices and the conveniences provided. There is 
considerable cost-cutting for every transaction performed. While in the past 
small investors gained access to trading in the capital markets mainly through 
the intermediacy of large investment banks for considerable commission, ow-
ing to online broking, they now have a substantially cheaper access: compari-
sons show that costs per transaction per consumer in conventional intermedi-

4 Since 2008 is a subsidiary of Bank of America.
5 Morgan J. P. Online Finance Europe. Securities Ltd., 2000. P. 26.

1.1. Online trading 

acy, for example that of Merrill Lynch as a broker, amount to around $373 and 
only $8 when using the services of the online broker Ameritrade  6, while on-
line brokerage services of Consorsbank, owned by BNP Pariba, charge a com-
mission for new clients of €4.95 per transaction for volumes above €10 000  7. 
Costs per unit of transaction performed on the Internet are 25 times as low 
as those for an over-the-counter transaction in an office  8. These days trading 
demands less participation on the part of employees who service it; marginal 
costs for closing additional transactions are low; the new electronic brokers 
entering the market results in increased competition with traditional broker-
age firms, which leads to greater effectiveness of their activity.

Another advantage of online trading is improving the speed of the trans-

action closing and settlement, as there is no need for paper-based documents 
to be digitized, processed and archived.

Electronic brokering facilitates the wider scope of development of the so 

called “day trading”, a specialized type of investing, where investors make a 
profit by buying or selling securities or currency pairs, that is, they open and 
close short-term market positions — mostly within a day (a session). This 
trading is usually speculative in character and is tyFigal mainly for US capital 
markets. According to an analysis of the ECB‘s made in 2001, the day trad-
ing is not a significant phenomenon in Europe as it is in the US, where in the 
middle of 2001 there were 10 000 active investors of this type  9.

1.1.3. Development and state of e‑brokering 

In the evolution of e-brokering we observe an extensive period of devel-

opment during the mid-1990s (1996–2000), which reaches a peak in 1999–
2000. Throughout this period masses of clients turned to using online broker-
age services. Consequently, traditional brokers and banks successfully joined 
the online market in basically two ways — by creating their own e-business 
model or by merging with an existing electronic broker  10. Owing to the glob-
al network this period reports a boom in the number of new players on the 
market for intermediaries — in the USA, companies offering brokerage ser-

6 Coorey M. Internet broking: Europe‘s turn to get wired // Global Finance. 1999. Nov.
7 Consorsbank [Electronic resource]. URL: https://www.consorsbank.de/ev/Wertpa-

pierhandel/Depot-Software/Trader-Konto (date of access: 22.03.2015). 

8 Sahut J.-M. On-line Brokerage in Europe: Actors & Strategies // JIBC. 2003. Vol. 8. 

No. 1.

9 European Central Bank // The Euro Equity Markets. 2001. Aug. P. 43.
10 Sahut J.-M. On-line Brokerage in Europe: Actors & Strategies // JIBC. 2003. Vol. 8. 

No. 1.

1. E‑FINANCE 

vices grew to over 100 from 35 in 1997  11. Despite the initial resistance, near-
ly every major investment intermediary offers consumers online trading from 
the home or office.

According to JP Morgan’s estimates within 4 years (1997–2000) the num-

ber of clients using electronic brokering services in the Eurozone rose ten 
times to reach 3 m people  12.

A suitable indicator for assessing the development of online trading is also 

the number of security trading accounts opened. In the middle of 2001, in 
Germany there were 2 141 000 online accounts or about 50  % of all trading ac-
counts in Europe, and, according to statistics, the German market holds the 
leading position in this field, followed by the Swedish one with 11  % market 
share  13. In the same year 13.2 m Americans bought or sold securities online, 
and 43  % of American households that have trading accounts, trade online  14.

A survey on the use of Internet for researching capital market and buying 

shares was carried out in 2006 by the leading German bank Deutsche Bank 
among consumers from 7 European countries  15. Data shows that the Swed-
ish manifest the strongest interest in getting information online about stock 
market quotations and financial news about companies (slightly less than 
10  % of consumers), then the Dutch and the Germans (about 6  %), followed 
by the British (about 3.8  %) and the French. Again Swedish consumers (by 
about 4  %) are the respective leaders regarding purchase of shares, followed 
by the Germans with less than 2  %.

Potential users of the online distribution channel are the owners of stocks, 

whose average share for the 7 countries researched is slightly over 20  % of the 
population according to data from 2006. This share varies for particular coun-
tries, with Swedish and British investors scoring the highest: » 35 and 30  % 
respectively, and the shares of stockholders from Germany, Italy and Spain 
are below the average. In comparison: according to J. P. Morgan’s data, at 
the end of 1998 only 12  % of the adult population of Europe owned stocks, 
that is, the trend is for a growth of investors in securities, and consequently, 
the consumers of online trading.

11 Coorey M. Internet broking: Europe‘s turn to get wired // Global Finance. 1999. Nov.
12 European Central Bank // The Euro Equity Markets. 2001. Aug. P. 43.
13 Sahut J.-M. On-line Brokerage in Europe: Actors & Strategies // JIBC. 2003. Vol. 8. 

No. 1.  

14 Online Investing: Brokers, Investors, Statistics, and Market Trends // eMarketer. 

2002. June. 

15 Meyer Th. The worst is over for online brokerage // Deutsche Bank Research. E-Bank-

ing Snapshot. 2006. 17.

1.1. Online trading 

The main motives for participation in online trading include convenience, 

speed of getting information and closing transactions, lower fees. Research shows 
that the probability of users participating in online trading grows along with the 
number of other financial products sold online, including use of Internet banking.

According to a survey from 2007 among the clients of the leading British 

brokerage company for retail investors Barclays Stockbrokers  16 62  % of them 
bought securities online, with 44  % of them regularly investing this way. In 
order to overcome one of the substantial obstacles before online investing — 
the consumers difficulty in making investment decisions, Barclays Stockbro-
kers developed the so called “Investment Selector”  17. This is a web-based soft-
ware module that helps investors choose those investments that best match 
the level of risk they are ready to take.

More recent data from the research company Aite Group illustrate Amer-

icans’ investment activity towards the end of 2010. They show that 19  % of 
the value of all retail investments are managed with the help of online bro-
kerage firms, with this share being 12  % higher than the pre-crisis levels of 
the years before 2007–2008.

Actual data on the users’ perception of online trading and the number of 

online investors is presented in a study (BMO InvestorLine Study)  18 per-
formed by one of Canada’s leading bank groups, Bank of Montreal, pub-
lished in May 2013, point that at the moment 20  % of Canadians invest on-
line and this percentage is expected to reach 65  % over the next five years, 
reaching 80  % for the clients aged 18–34 in 2018.

The development of e-brokering is directly dependent on the development 

of the capital markets themselves, one of whose distinguishing characteris-
tics is volatility and instability. The decline in the investment activity of the 
population has a negative impact on the number of consumers using e-bro-
kering services. The above dependency is supported by the consequences 
of the capital markets crisis from the end of 2001 till the beginning of 2003, 
when the demand for online brokerage also fell.

16 Barclays Stockbrokers is a subsidiary of Barclays Wealth and currently manages se-

curities for £1 billion. In his order at the beginning of 2007 was made a survey of its cus-
tomers by the company YouGov. Source: Barclays Stockbrokers launches new online tool 
to help investors make their own decisions [Electronic resource]. URL: http://www.24–
7pressrelease.com/pdf/2007/04/13/press_release_26929.pdf (date of access: 18.02.2015).

17 Barclays Stockbrokers [Electronic resource]. URL: https://www.stockbrokers.barclays.

co.uk/AccountOpening/InvestmentSelector.aspx?category=registration&usecase=IST&h
ost=Barclays&&QS= (date of access: 31.07.2017).

18 Forexmagnates [Electronic resource]. URL: http://forexmagnates.com/signs-of-pros-

perity-for-online-investing-in-canada/(date of access: 23.01.2015).

1. E‑FINANCE 

A major segment of online trading is trade in foreign currencies, or the so 

called currency pairs. This fact corresponds with the principle that the cur-
rency market — FOREX (foreign exchange or FX) is the biggest financial 
market. The daily volume of world currency trade varies between 4–5 trillion 
dollars on average (in April 2013 this volume reached the maximum value 
of 5.3 trillion USD  19). Retail trade at the FX market accounts for about 4  % 
of the total turnover, with the highest volumes in absolute value realized in 
the USA and Japan  20. Electronic trade dominates the FX market — statistics 
show that over 50  % of individual investor’s trade through an online channel.

Self‑study questions 

1. What does the concept of online trading mean?
2. How are the traditional brokers with physical branch network cate-

gorized?

3. What are the functions of online brokerage?
4. What are the main types of brokers offering online trading in securi-

ties and currencies?

5. How can the users be distinguished according to their behavior in stock 

trading and also their attitude towards online trading?

6. What are the main advantages that online brokerage provides for users?
7. Name key stages in the development of e-brokerage in the world and 

also name the leading countries with most users in Europe.

8. What are the correlation levels between the development of capital 

markets and e-brokerage?

1.2. Electronic banking 

The financial sphere and banking, in particular, is one of the areas where 

the use of modern information technologies has been traditionally strong ever 
since their intensive development started. Owing to the use of bank infor-
mation technologies the quantitative and qualitative expansion of the mar-
ket for products and services is now possible, as well as increasing competi-
tion between banks, gaining a larger market share, not least by using various 
distribution channels. Traditional serving the client over the counter in the 

19 Rime D., Schrimpf A. The anatomy of the global FX market through the lens of the 

2013 Triennial Survey // BIS Quarterly Review. 2013. December. P. 1.

20 Ibid. P. 39.