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

To: Dominick who wrote (8056)	3/19/2000 7:21:00 AM
From: Dan Duchardt	Read Replies (2) \| Respond to of 12617

Hi Dominick, Never having been on the other side of the fence so to speak in the Client/Broker Dealer relationship, I can only speculate on this. My guess is that elimination of the BDs for daytrading would be problematic for everyone. Although we as a society sometimes go overboard on these things, there are many examples one could use to defend the need for a hierarchical structure within institutions (e.g., the military), hardware, software, industry, etc.; you name it, and you will find it. At a minimum the BD should be providing two things: 1) Service to the client in terms of order entry, order routing, order status reports, and account records. 2) Oversight and control over the activities of the BD's clients to ensure compliance with the rules and regulations (e.g., short selling, margin), and to act as a central point of contact for handling disputes, such as even relatively minor things like "clearly erroneous" trades. Maybe you could do away with #1 by finding a suitable substitute, but that would likely mean shifting the burden of order identification to a more central location. I don't know the details of how orders are identified, but my guess is the BD's computer systems do a lot of that work. Shifting it to an already overloaded central processing system just might bring the whole thing to its knees. Plus, without BDs we would all need our own accounting systems, and what in the world would the IRS have as authentication of our individual account records? Elimination of #2 would probably lead to pure chaos. Every individual who ever thinks they were done wrong on a trade would be dealing directly with the contra party instead of having things buffered by a relatively small group of intermediary BDs who (hopefully) have representatives with considerable experience and expertise in the mechanics of the market. I think that's why they have those license requirements for BDs. Yes?? Enjoyed our visit in NY. Hope our paths cross again. Dan