Researchers found that although the introduction of Web trading seems to increase total trading, it does not appear to increase short-term trading or last-hour trading. This suggests that the Internet may not be an important catalyst for speculative trading, says the NCPA.

The author's study was based on trading data from the participants of two large corporate 401(k) plans. Both plans opened a Web trading channel in 1998, adding to pre-existing phone trading.

Within 18 months of the initiation of Web trading, online transactions had grown to approximately 60 percent of all transactions. The total trading rates of the participants - adding up phone and Internet channels - had quadrupled from its pre-Web level.

Of those participants who tried the Internet, 88 percent made their next trade on the Web. Conditional on a first and second Web trade, 94 percent made their third trade online, and 96 percent of Web traders made their fourth trade online.

The average phone transaction in this data is 75 percent larger than the average Web transaction - for example, respective transaction averages of $70,000 (phone) versus $40,000 (Web) for one of the two firms and $105,000 versus $60,000 for the other firm.

The researchers also determined that while high balance plan participants are more likely to try the Internet channel, low balance participants are most likely to trade frequently on the Web. Hence, low balance participants conduct a relatively large share of Web transactions.

Lastly, the authors found that despite popular reports about excessive Internet-based day trading, the availability of a Web-based channel does not increase short-term trading. They define short-term trades as those that are "reversed" within five days of execution.