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Non-Tech : Knight/Trimark Group, Inc.
KCG 20.000.0%Aug 17 5:00 PM EST
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To: michael r potter who wrote (523)4/21/1999 7:28:00 PM
From: ClearSky  Read Replies (2) of 10027
 
Michael, in response to the inquiry about NITE and SWS, they both are in the most profitable areas of online brokerage. While obviously many firms do extremely well on the retail side, it's my understanding that it's getting more difficult as commissions are lowered, competition increases, and firms deal with the costs associated with servicing retail accounts.

NITE is primarily a market maker, which is an extremely capital intensive venture, but very profitable--although becoming less so as the spreads are reduced, and stocks are quoted in smaller and smaller increments. But with NITE's technology and focus they seem ideally positioned to continue their explosive growth.

SWS has a very large clearing department, which is a highly profitable piece of the business. In fact it's so profitable that many discount brokerages are now getting set up to do their own clearing (Discover and Waterhouse/Jack White recently did). But, because of the large capital requirements for clearing, all but the largest broker-dealers will not do their own clearing and continue to use Southwest or another firm.

Both are well established, respectable firms. SWS is traded on the NYSE.

Hope this helps. I bought more SWS yesterday and keeping fingers crossed for great earnings tomorrow.

Jeanne
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