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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: agent99 who wrote (7607)	8/16/1999 5:56:00 PM
From: TFF	Respond to of 12617

ECN Concerns Barrons Aug 14th,1999 To the Editor: I have been day-trading for over four years. I am concerned about the regulation and proliferation of electronic communications networks, or ECNs, and particularly the potential for electronic frontrunning. Let me give two examples of how this might happen. Example 1: The offer is at 1/2, the next offer is at 5/8, and a buy order comes in with a 5/8 limit. The ECN can front-run, take the 1/2 offer, and sell to the buyer at 9/16. Net non-risk profit to the ECN is 1/16, or 6.25 cents per share or $62.50 for a 1,000-share order. In a fast-moving stock, it may be necessary to submit a buy order with a limit above the offer in order to get filled. The ECN can take advantage of this. Example 2: The bid is at 1/4 and the offer is at 1/2 . Two orders come in almost simultaneously, one to buy at 1/2 and one to sell at 1/4 . The ECN can front-run with a 5/16 bid and a 7/16 offer, fill the orders there and make 1/8 or 12.5 cents per share or $125 on 1,000 shares. Note that in this example the buyer and seller would both save 1/16. However, the people on the offer and on the bid won't get filled. To put these profits into perspective, ECNs charge less than two cents a share, so these profits are huge, and risk-free. In addition, decimalization of the markets will make the situation worse. In the first example, the ECN would be able to skim 12 cents per share instead of 6.25 cents. In the second, the ECN would be able to skim 48 cents per share instead of 12.5 cents. Something must be done to assure the integrity of our markets. FRANK YANG Mohegan Lake, New York

To: agent99 who wrote (7607)	8/19/1999 11:10:00 PM
From: TFF	Read Replies (1) \| Respond to of 12617

Online Investing's Next Frontier by Frank H. Lallos, CFA Senior Analyst, Gomez Advisors Special to CNBC.com If you've considered investing online and haven't for a variety of reasons, you're not alone. A survey by Gomez Advisors and Harris Interactive found 16.3 million investors, 3.2 times the number of current online investors, are poised to begin trading online. So what's holding them back? Nothing, our survey indicates but the right offer. Analyzing the pool of prospective online investors, Gomez identified three distinct groups that will make up the next most likely converts to Internet investing. These three groups include: Offline brokerage customers ready to convert to online brokerage. Investors with offline brokerage accounts who indicate that they are "likely" or "extremely likely" to "open an online brokerage account in the next six months": 2.85 million. Offline investors without a brokerage account ready to open an online account. Offline investors without a brokerage account (mutual funds, etc.) who indicate that they are "likely" or "extremely likely" to "open an online brokerage account in the next six months": 660,000. Active offline brokerage customers who use online investment research. Offline investors who demonstrate behavioral patterns similar to investors who currently trade online (e.g., do research online, purchase similar products): 13.25 million. The study, which was conducted in June through online questionnaires with 20,119 adults, also found that 5.1 million online investors have traded at least once during the past six months through 11.2 million online accounts. These investors represent a broad cross section of investor types, from the tool- and research-hungry serious investor to the emergent one-stop shopper, who demands convenience above all else. Early on, hyperactive traders, who intend to trade an average of 40 times a year, accounted for more than 50% of customers. Now they represent barely 10% of Internet investors. Today's investor invests for the long term, uses a broader range of products, and is less price-sensitive than the hyperactive trader, our survey found. Regardless of the investor profile, current online investors are an elite group. According to our data, online investors are: Wealthier: 31% higher median income than offline investors. More educated: 41% more likely to have college or post-graduate education than offline investors. More likely to be a minority: 2.5 times more likely to be Asian and 1.5 more likely to be Latino than offline investors. Clearly, online investing has gone mainstream. Market penetration continues to grow and full-service customers are now also considering and opening online accounts. It should be interesting to see the magnitude of these changes in our next brokerage survey early next year. This is the online investor's bottom line: Watch out world there's another wave coming. We can expect firms such as Fidelity, Schwab, and E*Trade to step up their efforts to attract these new investors. The result: a further expansion of the research and analysis offerings provided by these firms, as well as more investment products. Stay tuned.