"Wednesday June 28, 7:00 am Eastern Time
Company Press Release
SOURCE: Web Street, Inc.
Web Street Begins Clearing for Global Customer Base;
Expects Pivotal Move to Drive Future Revenue and Profitability Growth
Global Online Financial Services Firm Also Announces Industry's Lowest Published Margin Rates
for High Balances
DEERFIELD, Ill., June 28 /PRNewswire/ -- Web Street, Inc. (Nasdaq: WEBS - news), parent company of Web Street
Securities, Inc., a leading online financial services firm, today announced it has commenced self-clearing operations for its
global customer base. Management expects that this transition will make the Company less dependent on transaction
revenues, as interest income generated from carrying Web Street's customers' accounts begins contributing to revenues and
gross profit margins.
As a result of this transition, Web Street anticipates that its profit margins will also benefit by lowering the cost of trade
clearance and execution, as compared to what the Company was previously paying to outsource those functions. Going
forward, management believes interest income on margin accounts could significantly contribute to future revenue streams.
Joseph J. Fox, Co-Chief Executive Officer of Web Street, commented, ``This is the most significant strategy we have
executed since our initial public offering last November and signals the beginning of Web Street's next generation growth
strategy. With this move, our universe of potential customer accounts expands significantly. As of April 2000, there was
more than $250 billion in margin account balances held in U.S. brokerage firms. More importantly, this moves us closer to
our goal of becoming our client's primary account holder, as we now offer a full suite of services. We expect that our clients
will increasingly rely on us as their one-stop online financial services provider.''
In conjunction with the conversion to self-clearing, Web Street also announced today the lowest published margin interest
rates in the industry for high balance customers. Under Web Street's new tiered rate structure, interest rates charged to
customers on margin balances of $2,500,000 or more will be 1-1/4% below broker call, as published in the Wall Street
Journal. The Company's commission schedule will retain commission-free trading on Nasdaq stocks of 1,000 shares or more
for market orders on Nasdaq stocks trading over $2.00 per share. For limit orders and other equity trading, the internet
commission rate will be $14.95 per trade. For equity and index option trading, the internet commission rate remains $14.95,
plus $1.75 per contract.
``Over the balance of this year, the additional interest income and lower trade clearance and execution costs will help offset
the impact of lower payments for order flow compared to those received under our prior clearing agreement,'' stated Joseph
Barr, President and Chief Financial Officer. ``Longer term, our management team views establishing self-clearing
capabilities as the foundation for greatly diversifying our revenue base and a clearer path to profitability.''
With these announcements, the Company is now able to offer current and potential customers several new benefits, including
enhanced cash management services and lower margin rates. Web Street's new cash management account, the ``Global Asset
Manager'', will offer customers free unlimited check writing, online account access, consolidated account statements, a Gold
MasterMoney(TM) debit/ATM card and electronic bill payment. As in the past, the Securities Investor Protection
Corporation (SIPC) provides account coverage of $500,000 ($100,000 in cash and $400,000 in securities) per account.
Web Street goes beyond this industry minimum with an additional $99,500,000 in coverage for each account through Lloyd's
of London, providing $100 million in customer account protection.
Web Street's move to self-clearing also further extends the Company's reach in the global equities market. Fox commented,
``An important ancillary effect of this move is to set the stage for providing true cross-border trading functionality. Our new
self-clearing operations will ultimately facilitate giving our domestic customers the ability to invest in foreign securities and
our international customers access to other non-domestic foreign securities.''
About Web Street
Web Street, Inc., based in Deerfield, Illinois provides online brokerage services to individual investors in the United States,
Europe, Asia and Latin America, through its wholly-owned subsidiary, Web Street Securities, Inc., which was founded in
1996. Web Street was recently awarded a five star customer service rating in Money Magazine's ``Best Online Brokers of
2000'', in addition to four star ratings by Barron's in 1998 and 1999, as well as being ranked as one of the top 3 online
brokers in March 1998 and March 1999 by SmartMoney. Web Street offers 24 hours a day customer service, low-price
commissions, and real time account information via multiple channels -- online, touch-tone telephone, person-to-person via
telephone, and face-to-face onsite through its existing and future brick-and-mortar branches. For more information on the
Company's products and services, visit us at www.webstreet.com or call us at 1-800-WEBTRADE (1-800-932-8723).
Cautionary Note Regarding Forward-Looking Statements
This news release includes forward-looking statements that reflect Web Street's current expectations about its future results,
performance, prospects and opportunities. Web Street has tried to identify these forward-looking statements by using words
such as ``will,'' ``expect,'' ``anticipate,'' ``believe,'' ``intend,'' and other similar expressions. These forward-looking
statements are based on information currently available to Web Street and are subject to a number of risks, uncertainties and
other factors that could cause Web Street's actual results, performance, prospects or opportunities in the remainder of 2000
and beyond to differ materially from those expressed in, or implied by, these forward-looking statements. These risks,
uncertainties and other factors include, without limitation, Web Street's ability to successfully implement self-clearing
operations, Web Street's ability to establish and maintain international relationships and relationships with content
providers, intense price and other competition among companies providing online financial services, Web Street's need to
maintain and increase its customer accounts, volatility in the securities markets, Web Street's ability to develop and enhance
its services and products, risk of system failures, and existing and future regulations affecting the online brokerage industry
or the Internet generally. For further information about these and other risks, uncertainties and factors, that could affect Web
Street's future results, performance, prospects and opportunities, please review the disclosure included under the caption
``Business-Risk Factors'' in Web Street's annual report on Form 10-K for the year ended December 31, 1999, as filed with
the Securities and Exchange Commission. Except as required by the federal securities laws, Web Street undertakes no
obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events,
changed circumstances or any other reason after the date of this news release.
SOURCE: Web Street, Inc."
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