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SEC officially approves online trading

The Securities and Exchange Commission officially approved Internet stock trading.

The Securities and Exchange Commission officially approved public stock trading on the Internet in a major decision that circumvents traditional federal registration requirements.

SEC Commissioner Steven Wallman made the announcement while attending a conference called "IPOs and Capital Formation on the Internet" in Palo Alto, California, according to the San Jose Mercury News. Wallman issued a legal opinion that the SEC would allow such transactions when asked about a case involving Real Goods Trading, an alternative energy company that wants to set up a bulletin board so that investors can buy and sell stock.

Federal securities laws require brokers and dealers who negotiate exchanges of stock to register with the SEC. Wallman reportedly said those laws don't cover all proposed transactions and ruled that Internet trading such as that proposed by Real Goods would not be bound by those requirements.

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