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

To: TFF who wrote (7817)	12/10/1999 5:19:00 PM
From: TFF	Respond to of 12617

Schwab: Merrill Lynch Net plans doomed By Bloomberg News Special to CNET News.com December 10, 1999, 10:45 a.m. PT SAN FRANCISCO--Chuck Schwab today said rival Merrill Lynch's Internet brokerage plans won't work. Merrill must balance the interests of its 14,800 brokers, compensated largely through commissions, against some clients' desire to make trades themselves at discount prices. Last week, Merrill began charging as little as $29.95 per transaction, a fraction of the cost of going through a broker. your distribution group out there that's getting completely undermined in their compensation, and we haven't yet seen the final grumblings of their distribution system," said Schwab, speaking from his San Francisco office. "It's going to be a pretty negative outcome." A Merrill spokeswoman said customers like the firm's new Internet service. "The early success and incredible momentum of our choice platform for clients speaks for itself," said Susan Thomson. She declined further comment. Schwab isn't taking any chances. Today he unveiled Charles Schwab's plan to step up training seminars to convince the 56 percent of its clients who don't now use the Web to convert to online trading. The firm hopes to attract about 200,000 people to the seminars next year. Schwab began the customer training two months ago and 30,000 people have attended. The move is an effort by the broker to respond to competition from Merrill and Morgan Stanley Dean Witter. Both of those firms have created online trading businesses in a bid to capture some of the growth in Web stock transactions, which now account for one in six U.S. equity transactions. Schwab said 70 percent of the people who attend the seminars--dubbed WebShops--take up online trading immediately. "This fits right into our concept of customer service and customer education and it's inconceivable to me to see Merrill Lynch or Morgan Stanley bring customers in and try to convert them." Charles Schwab Corp., founded by Chuck Schwab in 1971, will also advertise its stock recommendations next year, he said. "We'll be much more overt in our recommendations," he said. "For investors who might just be getting started, we have to help get them on the right path. That's a big part of our mission as a company." Full-service firms aren't taking assets from his company, the 62-year-old Schwab said. Charles Schwab added $25 billion in new customer funds in the third quarter and the company is now "doing better than that," he said. "We're not overly optimistic that they're going to be that successful," he said. "We haven't seen any bite at all. In fact, the Merrill Lynch's recent ad campaign mentioning us as No. 1 in online, I have to thank them for it." Merrill, he said, is also sending "mixed messages" by having three different offerings: a full-service brokerage account, a fee-based account with unlimited trades for $1,500 or more a year, and the discount brokerage product. "We're sort of a well-honed company and they're new entrants into this business," said Chuck Schwab. "I don't think they can really reorient their culture and be significant competitors in the space that we're in." The WebShop seminars are aimed at the 77 percent of Internet users who consider themselves investors and don't use the Web to invest, based on a Schwab-sponsored Harris Interactive survey of 2,239 Internet users. Fully 28 percent of respondents said they aren't online investors because they like having a broker or advisor; 19 percent are afraid of making a technical mistake; 18 percent are worried about security, and 9 percent fear it's too difficult. The seminars can help allay many of those concerns, Chuck Schwab said. For example, "we do over $2 billion a day of transactions and we have no security issues," he said. The company will disclose November trading activity next week. Schwab stock fell 1.3125 to 38.9375 in midday trading. The stock is up 38 percent this year, less than the 60 percent rise in the Bloomberg U.S. Internet Financial Services Index. Schwab stock peaked at 77.5 on April 14. "The fury of the Internet got carried away and the stock got ahead of itself," said Chuck Schwab.

To: TFF who wrote (7817)	12/12/1999 4:48:00 PM
From: H-Man	Read Replies (1) \| Respond to of 12617

Yep this stinks. locks out the little guy. the startup. the market makers and specialists no longer have omnipotence. The wish to get back to that state. Reducing the number of daytraders is the way to go. the new margin minimum will actually require a much hihger balance dont forget. The NYSE and NASD say that by rasing the margin requirement it will "address the risks associated with the practice" (of day trading). What wonderful and compasionate people they must be. They are concerned for my welfare. I think i send them some flowers or a box of candy for their kindness. ggg Really, look at that. It implies that if you have $25,000 you are more able to understand the risks than if you have say $10,000. This forces a new trader to risk more money than otherwise would be necessary. The reasoning does not make sense. The market making specialist firms go on television and complain about volatility caused by day traders, yet this proposal, on its surface would seem to add to the volatility because of the increased buying power, and the need to close positions before the market closed. (positions that would have otherwise never been entered. These same firms say that day trading hurts investors. The reality is that in the long term a stock will live or die on the companies own merits, regardless of the trader. Every one on wall street knows this. If an investor is looking long term, the day to day fluctuations are of minor concern. I believe that the motive is in reality to drastically reduce the number of day traders. This in turn will allow the market making firms and the specialist to return to their once lofty position of omnipotence. A status infringed upon by the modern day trader. Yes any trading is high risk. Most day traders loose money and fail. This is no different than starting any small business; most fail. Yet we do not say to a small business start up you have to have $40,000 or you are not allowed. That is exactly what the new proposal is doing. And take note, that the reality is that under the new rules a new trader must start with at least forty to fifty thousand not the twenty five, for a trader must expect to loose some money as they learn. It is no different than any other business, you loose money at first. There will be other consequences of this proposed rule. They will include: By increasing the minimum balance, a new trader is forced to risk much more money than would otherwise be necessary. A trader could be forced into holding a loosing position, or not taking a profit on a winning position that they entered that day, to avoid being declared a day trader, then having to come up with a large sum of money. The 4:1 capability encourages traders to take larger positions and increase their risk. The exact opposite of what a newer trader should do. It is designed to benefit the large established firms and people with a lot of money, while locking the small guy out. It is wrong. To contact the NYSE: Go to: nyse.com Then click on the "Contact us" button. To contact the NASD Complete instructions for submitting comments: nasdr.com SEC. Filing for the new margin rule has not been completed. The SEC takes comments on all proposed rules and they are entered into official records and made available to the public. You can send in comments now, but the SEC needs to have a file number of the proposal. You may need to send it again once the filing is complete. Instructions for submitting comments to the SEC: sec.gov To contact the US Senate, contact any or all of the following, url for email follows: US Senate Banking Committee Phil Gramm (R-TX), Chairman Subcommittee on Securities Rod Grams (R-MN), Chairman Jim Bunning, (R-KY), Vice Chairman Richard Shelby (R-AL) Wayne Allard (R-CO) Robert F. Bennett (R-UT) Chuck Hagel (R-NE) Rick Santorum (R-PA) Mike Crapo (R-ID) Christopher J. Dodd (D-CT) Charles E. Schumer (D-NY) Evan Bayh (D-IN) Tim Johnson (D-SD) Richard H. Bryan (D-NV) Jack Reed (D-RI) John Edwards (D-NC) senate.gov