FIRM UNVEILS $1 ONLINE TRADES
nypost.com
By JOHN DIZARD
NY Post
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A Greenwich, Conn.-based online brokerage firm is offering trades for a penny a share, or a minimum of $1 a trade, including limit orders.
The new deal from interactivebrokers.com - the online stocks, futures and options dealer - contrasts with commissions on 1,000-share limit orders of $19.95 to $29.95 at firms such as E*Trade and Schwab.
Interactive brokers, which is part of the privately held Timber Hill Group, has $300 million in capital, extensive proprietary order management and execution systems, and the personnel in place to accommodate the retail trade.
The firm has principally dealt with institutional customers but will now accept accounts as small as $2,000.
This is bad news for online brokers such as E*Trade and Ameritrade.
Unlike interactive brokers, they can't just lay their retail customers' trades on top of an existing business at low cost. In addition, the customers most likely to be attracted by the low rates and fast execution will be the high-transaction-volume customers who are the most profitable part of the business.
"We provide no research and offer no handholding, but when you know what you want to do and you are ready to do it, we'll execute your trade at a better price, faster, and at a lower cost than anyone else can," said Thomas Petterfy, the CEO and principal shareholder of the Timber Hill Group, said, "We guarantee best execution in options and are about to complete our system to do the same in stocks."
"Best execution" means the most favorable price for the customer on any exchange or electronic communications network.
Interactive brokers offers online futures and options execution with real time prices.
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