n the past, mergers and acquisitions have played a big part in shrinking the number of firms included in our list of on-line discount brokers each year. In 2002, AAII’s On-Line Discount Broker Guide included 77 on-line discount brokers. In 2003, there were 62; 54 in 2004, 47 in 2005, 46 in 2006 and 47 last year. The list is smaller this year again, with only 44 on-line discount brokers participating. Six new firms joined the group this year: eOption, JetTrade.com, LowTrades.com, SogoTrade, Thinkorswim and Wang Investments. Nine firms were eliminated from the group this year, as well. Some merged with other firms (CyberTrader merged with Charles Schwab and Accutrade merged with TD Ameritrade), and others chose not to participate in the listing this year.
The bar chart in Figure 1 traces the growth and subsequent decline in the number of on-line discount brokerage firms over the last 16 years. A big jump took place in 1996, soon after the launch of the first Internet-based broker.
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