| To: $Mogul who wrote (8773) | 2/25/2001 7:53:37 AM | | From: TFF | | | | | Nice find. I wonder if the rest of the daytrading platforms will offer globex trading access. I know that alot of the futures direct order entry platforms are adding access to equity markets. |
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| To: TFF who wrote (8774) | 2/25/2001 12:29:38 PM | | From: Jon Tara | | | | Unfortunately, you still have to trade in a separate account.
Can you at least transfer funds between accounts? |
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| To: TFF who started this subject | 2/26/2001 6:46:42 AM | | From: supertip | | | | Ameritrade to Launch Three New Online Trading Brands
ALL THINGS TO ALL PEOPLE: In efforts to tailor its products to
cover all segments of online investing, Ameritrade said it will
soon offer three new trading brands. Ameritrade Pro will be
geared towards the highly active professional and semi-
professional trader, while Ameritrade Plus will provide a higher
level of personalized investing services. The third, Freetrade,
is intended to be a virtual, commission-free transaction
platform. The regular Ameritrade brand will continue to exist as
the value-oriented approach to self-directed investing.
Ameritrade Pro, which will offer quick trading executions and
access to more advanced stock quotes, is being created to
capitalize on the firm's planned $67.3 million acquisition of
Houston-based software provider TradeCast, which offers direct-
access trading through online trading software that connects
customers to exchanges. Ameritrade Plus will be the most
expensive offering, the company said in a statement, without
mentioning what features will be the focus of the new brand. |
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| To: TFF who started this subject | 2/26/2001 7:02:21 AM | | From: supertip | | | | DOWNTURN BRINGS CHANGES TO ONLINE BROKERAGE SECTOR
FIRMS CUT BACK ON PRICEY ADS, EXPAND SERVICES
By Lisa Singhania
Associated Press
February 25, 2001
NEW YORK -- "Be your own sugar daddy," advised one humorous TV ad featuring a young man massaging a rich, elderly woman's gnarled and buniony feet. In another, a tow truck driver is shown on his own tropical island, a product of his success trading stocks on the Internet.
Online brokerages once competed fiercely to outdo each other's irreverent come-ons, but that was before the bull market fell on tougher times. Now the leading e-brokers are vying to remain viable as their customers slow down what had been a frenetic trading pace.
At the same time that they're curbing pricey ad campaigns, they're expanding their services and beefing up their technology in an effort to stand out.
"It used to be exclusively about cheap trades, but customers now want broader product offerings, advice, different access points for their money and maybe even bank branches," said Matt Vetto, an analyst with Salomon Smith Barney.
The push-the-envelope advertising has been toned down, replaced by more conventional marketing.
No middlemen, the latest technology and quicker trades at the best prices, promises an ad for Datek Online. CyBerCorp.com, a Charles Schwab & Co. subsidiary, uses black and white footage of Bruce Lee to compare trading to hand-to-hand combat.
Schwab ads also tout its Webshops--educational seminars that introduce customers to online trading. Fidelity Online Brokerage tells customers that wireless stock quotes are in their future, while an Ameritrade ad contrasts an assured young woman using its research and trading tools with a condescending, stodgy traditional brokerage client.
"They have all gone from brand awareness to brand message," said Scott Appleby, a technology analyst at Robertson Stephens. "The ads of the past were really eye-catching, but now they're moving to a message of value--why you should invest with them instead of someone else."
So far, Wall Street has struck a wait-and-see posture. The stock prices of some of the biggest e-brokerages--Schwab, E*Trade Group Inc., TD Waterhouse Group Inc. and Ameritrade Holding Corp.--have fallen 60 percent or more in the last year, and the short-term picture isn't expected to improve soon.
The market downturn has also brought cost control. Schwab recently imposed temporary salary cuts for 750 employees, including its two chief executives, and Ameritrade said it would lay off about 300 workers to cut expenses because of the drop in trading activity.
"An overall down market causes people to trade less," said Glenn Schorr, an analyst with Deutsche Banc Alex. Brown. "That means lower trading revenues, which causes online brokerages to pull in marketing expenses ... and that produces even lower growth rates for new accounts."
Still, a number of investment firms remain bullish on the industry's prospects, particularly because they don't see the supply of potential consumers running out any time soon.
"A lot of the growth in this industry is going to come from mainstream America--people who don't have brokerage accounts today or haven't done a lot of investing ... and traditional brokerages no longer have an advantage over online trading," said Greg Smith, an analyst with J.P. Morgan H&Q.
Smith's research shows that although the number of online trades dropped 12 percent between the second and third quarters of 2000, the most recent data available, they were still up 81 percent from the same time the previous year.
"Things should start to look up," he said. "The first quarter is the time of year when people invest their year-end bonuses, reposition their portfolios and open IRAs."
Debate remains about what online brokerages need to do to make money in an environment where trading volume is unpredictable.
E*Trade, for example, has rolled out a national ATM network, and plans a New York storefront with some customer service. The online brokerage also ramped up its investor research tools and has acquired a mortgage loan business.
Others, including CSFBdirect.com, are targeting more affluent accounts with promises of top-level customer service, research and access to initial public offerings. The hands-on attention mirrors what traditional brokerages have done for years to attract business.
"Today our average account size is about $60,000 per customer. Now we're targeting the higher-end investors with assets over $100,000," said Glenn Tongue, president of CSFBdirect.com.
"Many of the online brokers out there are attracting customers with very low asset levels and you can't make money off of them unless they trade a lot, which right now they aren't."
Looking overseas for new customers is another trend, although analysts aren't convinced that's a long-term solution, given currency volatility and cultural differences.
There are other niches, too. Datek has focused on technology upgrades that target the most frequent traders, including real-time trading and allowing customers to direct orders to the market maker or electronic trading network of their choice. Ameritrade boasts of low-cost and speedy trades.
Then there's competition from traditional brokerages, like Schwab and Fidelity, that already have the physical base. They are using their online offerings to hang on to customers interested in Internet trading who might otherwise go to other e-brokers.
"Our online customers are also our offline customers," said Tracey Esherick, executive vice president at Fidelity Online. "They're using the online area for some routine transactions and stock analysis, but they're still using our phone representatives and sitting down with branch representatives." |
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| To: TFF who started this subject | 2/26/2001 12:06:17 PM | | From: TFF | | | | Fortune - ETF's...ETF futures next?
Exchange-traded funds have revitalized the industry and attracted billions from investors. Which one is best for your portfolio?
Lee Clifford
ETFs can be ideal for plugging holes in your portfolio If you want to ... Then consider ...
Get broad market exposure through an index
Barclays iShares or Standard & Poor's SPDRs. Both are cheaper and more tax-efficient than traditional S&P index funds.
Diversify a portfolio and cut your exposure to tech stocks
iShares S&P Small Cap 600 or Russell 1000 Value. They have lower technology weightings than the major indexes.
Focus on a particular slice of the global market
Sector and country ETFs. They let you buy a collection of stocks, or an entire index, with one transaction.
If you've watched any non-Tivo TV lately, you have no doubt seen the omnipresent Barclays commercials for exchange-traded funds, or ETFs. In one spot a well-dressed woman prowls a high-end store and picks up a bar of Scottish Mist soap. Her eyes widen when she sees the label: made in south korea. Auntie Mae's Old American Chocolates? Also made in South Korea. Tasty Traditions Matzo Ball & Soup mix? Ditto. Then comes the tag line: "Spotted a trend? Buy it."
You might say the same thing about ETFs themselves. Traded under quirky names like Spiders, Cubes, and iShares, ETFs let you purchase baskets of stocks—meaning specific indexes, sectors, or countries—with a single transaction. In one fell swoop you can buy or sell a U.S. real estate index, an array of wireless stocks—and, yes, even the brunt of the South Korean stock market.
Since these new stock/fund hybrids were introduced on the American Stock Exchange in 1993, interest has exploded to the point where they're now giving traditional funds a run for their money—literally. Some 94 different ETFs currently trade on the Amex, totaling about $80 billion. And in December cash flowing into ETFs nearly equaled mutual fund inflows, according to the Investment Company Institute. Says Cliff Weber, senior vice president of new-product development at the Amex: "They've doubled in assets and in volume every year for the past four or five years, and we think we're still in the very early part of the growth phase." (See also "Along Came the Spiders" and "Cube Stake: Why the Nasdaq 100 Sizzles," in the fortune.com archive.)
That success stems from the major structural advantages that ETFs have over old-fashioned index funds. For starters, they trade throughout the day, just like stocks. (By comparison, you can only buy or sell mutual fund shares each afternoon at the market close, when the fund reprices its holdings.) You can also buy ETFs on margin and, in most cases, sell them short. Plus, these new entities are less expensive to run, meaning lower management fees. Barclays' S&P 500 iShares, for example, siphon off just nine basis points, or 0.09% of the value of your investment. The equivalent Vanguard 500 Index fund—one of the cheapest mutual funds around—has an annual expense ratio of twice that. But be warned: Every time you buy an ETF, you pay a trading commission. So if you're flipping them like pancakes, it will cost you.
ETFs also have a bigger advantage when it comes to tax efficiency (something you'll appreciate if any of your mutual funds lost money in 2000 and then stuck you with a taxable distribution). When investors redeem shares in a standard fund, the manager is often forced to sell stocks that have appreciated in order to raise cash. That triggers a capital gains hit for the remaining investors, even if the fund finished down in a given year. However, ETF redemptions are just like selling stock, so you won't get hit with capital gains taxes when other investors cash out. "If you're going to take a passive approach [to investing], your only alternative is an index fund," says Robert Levitt, a financial planner based in Boca Raton, Fla. "But ETFs are cheaper, easier to trade, and more tax efficient."
Having said all that, these new financial instruments are still very much a work in progress. Many of these baskets only recently began letting people reinvest their dividends, and they aren't set up for dollar-cost averaging (investing the same amount periodically), meaning investors who want to stash away $100 every two weeks would be better off in a no-load mutual fund, where they don't have to pay broker commissions. There have also been some red flags raised about liquidity for some of the newer, more sparsely traded issues, a complaint that ETF boosters are quick to contest. "People say they're illiquid because they don't see very many shares trade, but as long as they're created with underlying stocks that do trade, it's a nonissue," contends Levitt. That may be true for an S&P 500 basket, but don't count on the same liquidity with the Korean Kospi.
By their nature, we should add, some ETFs are more tax-efficient than others. You'll still have to pay taxes whenever an index is rejiggered, forcing a manager to sell stocks that have been dropped. That can lead to a distribution—and capital gains—that you can't control. While the S&P 500 is recomputed only a few times each year, stocks are constantly outgrowing small-cap and value indexes, meaning managers have to sell those companies to keep their portfolios in line.
The tax issue with foreign indexes gets even more complicated. Why? Fund administrators labor under SEC requirements that force them to sell off a company whose share of the index gets too large (for example, Nortel on the Canadian market). Several foreign iShares baskets, in fact, have already paid out unexpected capital gains distributions because of this, to predictably irate shareholders.
Finally, there is such a thing as overkill, say some financial planners, who would be loath to put their clients' money into, say, an e-commerce basket or one that tracks the Malaysian stock index. "Some of the providers are getting a little out of hand," says Chris Cordaro, a financial planner at Bugen Stuart Korn & Cordaro in Chatham, N.J. "Do we really need to segment the market that much?"
Weighing all these attributes—the good and the bad—we culled through the current ETF offerings to find those most useful to a typical portfolio. We found three specific uses for them: tracking major indexes, rebalancing your portfolio, and getting exposure to a remote corner of the market. Here are the best baskets for each.
T racking a broad index: You make no bones about it—you can't beat the market (or even stomach it), and you don't want to waste your time trying. Tracking the major indexes with an ETF, then, may well be the way to go. Financial planner Levitt, for example, simply won't put a client with a lump sum to invest in a regular index fund anymore. Which one should you buy? It depends, naturally, on how much of the market you want to cover. The broadest, and most conservative, option is the Barclays iShares Russell 3000 (Ticker: IWV), which includes the largest 3,000 U.S. companies ranked by market cap—exposing you to 98% of the investable equity market. If you'd rather stick to the heavyweight Dow Jones Industrial Average, State Street offers Diamonds (DIA). Those wishing to track the S&P 500, though, have two fairly straightforward choices: Barclays iShares (IVV) and State Street's SPDRs (SPY). Barclays' large-cap offering is slightly cheaper, but Spiders have the big plus of having paid just one tiny capital gains distribution in seven years. (The iShares hit investors with a big one right after launching last year—not an auspicious move.) In terms of popularity, however, nothing comes close to the Bank of New York's Cubes, which track the Nasdaq 100 (QQQ) and are by far the most heavily traded ETFs. The benefit is that they let you invest quickly in virtually every blue-chip tech stock around. The problem is that you still have to figure out which way—up or down—to place your bets. "Right now," says Levitt, "we're shorting them."
Incidentally, you're likely to see big fund companies fighting back in the coming months by adding cheaper share classes to their own index funds. Vanguard, for instance, is currently working to launch its brand of ETF, called Vipers, by the end of March, and the company has already added a new "Admiral" share class, offering lower expense ratios for longtime investors with hefty accounts.
To balance your portfolio: Still tech-heavy? Haven't seen a small-cap stock in years? ETFs can be a quick way to get your portfolio back into shape. Cordaro likes Barclays iShares S&P 500/BARRA Growth (IVW) and Value shares (IVE), which segment the 500 companies into those two traditional investment categories. "We'll often buy the Value shares for clients who have a ton of tech stocks," says Cordaro. For exposure to smaller companies, Barclays has products that track the small- and mid-cap S&P indexes, and State Street offers StreetTrack baskets that follow the Dow Jones Small Cap Growth and Value indexes (DSG, DSV). But as we cautioned above, don't expect the same degree of tax efficiency in this category, because of the underlying churn of fast-growing companies. Though ETFs are still better than most comparable index funds on this count, that doesn't solve the basic problem. Sure, you want each company to become a growth company, but if it does, it gets kicked out, and you'll wind up with incrementally higher taxes.
To get exposure to a fast-moving corner of the market: ETFs can also be a shot in the arm—something to buy if you want specific, concentrated exposure to a country or sector on which you feel particularly bullish. iShare varieties come in a range of flavors, from health care to real estate, and you can even buy ones that track 21 of the most popular Morgan Stanley Capital Index countries. Levitt recently bought iShares Japan (EWJ) for a client who was convinced that that country would perk up but didn't want to bet on individual companies. Overall, however, financial advisors tend to be less enthusiastic about these types of ETFs, simply because the whole point of index investing is to avoid picking stocks or sectors. "We usually don't like to get that specific," says Cordaro.
That's also why the experts we spoke to weren't too hot on HOLDRS, another type of ETF marketed by Merrill Lynch. The company took popular sectors like broadband and wireless (yes, this was 1999) and put together portfolios of 20 stocks for each. But the portfolios don't have discretionary managers at the helm, and the stocks never change. So if a stock grows or slides too fast, there's no one there to manage a reallocation. Second, HOLDRS come only in blocks of 100 shares, making them too expensive for many investors.
But perhaps the biggest buzz these days is about Barclays EAFE basket, which is expected to launch this fall and will track Morgan Stanley's Europe, Australasia, and the Far East index. "It's going to be the first way to get broad international exposure in one place," Levitt says. In other words, U.S.-based international funds are about to get a run for their money too. |
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| To: TFF who wrote (8778) | 2/28/2001 5:33:45 PM | | From: Gary Korn | | | | Wall Street Journal
NYSE Fines TD Waterhouse
For Order-Processing Problems
BY COLLEEN DEBAISE
Dow Jones Newswires
NEW YORK -- In the first case of its kind, the New York Stock Exchange fined TD Waterhouse Group Inc. $250,000 for repeated system outages that prevented customers from making online trades.
TD Waterhouse (www.waterhouse.com) agreed to pay the fine without admitting or denying wrongdoing. A TD Waterhouse spokeswoman said the Web site was down due to software glitches that "have long been corrected."
NYSE officials said it was the first time they had disciplined an online brokerage for failing to follow proper procedures related to its Internet-trading business.
An NYSE panel found TD Waterhouse couldn't process orders on 33 different trading days between November 1998 and April 2000. The system didn't process orders for periods ranging from 2 minutes to 1 hour and 51 minutes.
During those times, the panel charged, TD Waterhouse didn't adequately advise customers of alternative order-entry systems. The panel also said the firm didn't follow telephone procedures correctly, sometimes putting customers on hold for up to an hour.
"The review period was one of explosive growth that was very challenging for us and for our industry," said TD Waterhouse spokeswoman Melissa Gitter. "We regret that customers may have been inconvenienced by the issues identified by the exchange."
She added the firm regularly spends "thousands of hours and millions of dollars" to improve its systems and procedures.
The NYSE also fined the online brokerage for not reporting numerous customer complaints related to the trading and accessing problems.
Ms. Gitter said criteria for reporting complaints to the NYSE changed during 1999, and that TD Waterhouse's system hadn't been updated to reflect those changes. |
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| To: TFF who started this subject | 3/1/2001 12:29:36 PM | | From: supertip | | | | Europe: Days of Many Trade-Only E-Brokers Seen Numbered
February 28, 2001 11:12 am EST
By Huw Jones
LONDON (Reuters) - The days of Europe's many execution-only online brokers are increasingly numbered, and most will either go bust, quit the business or turn themselves into wealth management services, analysts said on Wednesday.
Although the rise in online trading has been intimately tied to small investor interest in techs, the burst tech bubble has not dampened enthusiasm for online financial services, said Benjamin Ensor, analyst at research company Forrester.
"We are still in the middle of a revolution and consumer behavior has not been affected by the falloff in tech stock prices," Ensor told a Westminster and City online broking conference.
Goldman Sachs, which has launched its own online venture PrimeAccess, estimated that Europe's retail investment in equities totaled 2,000 million euros in 1999 and will rise to 3,000 million in 2004.
"The long term opportunities are looking encouraging," said Philip Holzer, managing director of Goldman Sachs International equities division.
Execution-only online brokers, who carry out trades but offer no advice, investment tools or other packages, underserve the mainstream consumers.
"The firms that will succeed will offer wealth management," Ensor said. This means providing account data, financial analysis and advice as well as execution of orders, a costly step not all e-brokers can afford.
Industry consultant Nic Stuchfield said these broad based services would also offer execution-only services as well as an entry point to wealth management packages. Only about 12 online brokers in Europe have more than 100,000 accounts, but the number of e-brokers has grown rapidly. Germany tops the league with 750. The UK, though with 30-40, trails in terms of the number of trades, Blue Sky consultancy said.
"You have relentless negativity in the press about online sharetrading in the UK," said Blue Sky's Suzan Nolan. Others blamed stamp duty or tax on share trades, and use of paper for share certificates. Goldman Sachs said Europe's top five e-brokers have combined trading volumes equal only to the third largest player in the United States, TD Waterhouse.
In the fourth quarter of last year, there were 12.9 million shareholders in the UK, but only five percent or 250,000 had active online accounts, while of Germany's 7.2 million shareholders, 14 percent or one million, traded online, said Blue Sky's Nolan. In Blue Sky's latest survey of 10 best European e-broking sites, half were German with Comdirect and Consors top, with a few Swiss, Spanish and Italian sites, but not a single UK site.
COMMISSIONS VOLATILE
Brokers largely depend on commissions which are volatile -- they fell by a third last year in the United Kingdom as payment for order flow, common in the U.S. is not prevalent in Europe.
Online wealth management is already emerging in Europe and there is likely to be too many players within a couple of years, Ensor said.
"The number of companies coming up with wealth management strategies is staggering, but execution varies from quite good to pathetic," Ensor said.
Those likely to succeed are Consors of Germany, Schwab Europe, a subsidiary of the U.S. group, and Britain's Egg, Ensor said. Some of the big German stockbrokers and UK retail banks were in quite weak positions, he added. A few specialist players like Durlacher and Killick will serve very rich clients, while others like Stocktrade in the UK will offer "white label" services whereby banks who don't want to set up their own e-broking execution division, outsource it, Ensor said.
The Germans were also leading the way in added services, with Consors offering terrestrial investment seminars targeted at women, or topics like how to read annual reports and derivatives trading. Comdirect offered customized news pages, Nolan said.
CROSS BORDER.
Goldman's Holzer estimated there are 230,000 daily online trades in Europe -- well behind the 1.1 million in the United States -- and "almost minimal" cross border, though long-term this could rise to 15 to 20 percent of daily transactions. Blue Sky's Nolan estimated that for the leading e-brokers in Europe, foreign trades represent 10 to 25 percent.
Holzer said cross border trade in Europe is hampered by multiple regulations, inefficient clearing and settlement, and excessive international transaction costs which are seven to 10 times trading costs in the United States, a market of comparable size.
"The most important issue is how you get clearing and settlement in place," Holzer said. "But we feel there is long term demand for international investment." Retail investors are already prompting exchanges to open later, with some German e-brokers offering markets on Saturday and Sunday, while some regional German exchanges offer very late trading or alliances with brokers, steps which the Deutsche Boerse will be forced to respond to even though there is some worry about the lack of liquidity in after hours trading at the moment, Holzer said. |
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