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

To: LPS5 who wrote (8550)	12/13/2000 10:20:30 PM
From: TFF	Read Replies (1) \| Respond to of 12617

The only way I see direct access trading become popular with the masses is if it's VERY simple. I don't see that in any of the current technology offerings, or for that matter the current market structure. Should be fun to watch the shakeout on the technology front though. The large discount firms'customer reps have a steep learning curve in front of them..heck they're still don't have a clue what an ECN is.

To: LPS5 who wrote (8550)	12/14/2000 10:04:17 PM
From: TFF	Respond to of 12617

SEC Investigates Wall Street's IPO Money Machine New York, Dec. 14 (Bloomberg) -- Securities and Exchange Commission Chairman Arthur Levitt's complaint that some brokers have charged money managers excessive trading commissions for access to the most profitable initial public offerings faces an uphill legal struggle, some lawyers say. SEC investigators this week ordered the biggest stock underwriters -- including Goldman Sachs Group Inc., Morgan Stanley Dean Witter & Co. and Credit Suisse First Boston -- to turn over records of customers who received shares of the best-performing IPOs. The SEC also wants records of inflated commissions the customers paid that may explain why they received the shares. ``They want to apply the magic label of kickback to it,'' said John Coffee, a Columbia University professor who specializes in the securities industry. ``Then they can characterize it either as a commercial bribe or extortion by the underwriter.'' Levitt has shown with new regulations he pushed on corporate disclosure that he is willing to challenge Wall Street practices he regards as unfair to individual investors. Yet he may have difficulty proving that high commissions are being charged in exchange for IPO profits. ``The SEC has a difficult time proving that it's anything more than a good customer getting well treated,'' said Roger D. Blanc, a partner at Willkie Farr & Gallagher. ``You'd have to be able to understand that there was a specific understanding of a specific quid pro quo and I think that's a high burden for the SEC to establish. Every business treats its best customers well.'' Routine Swapping trading for service is how the business works, money managers and brokerage executives say. Brokerage commissions in 1999 were about $12 billion in the U.S. and have grown about 20 percent annually for the past four years, according to estimates from Greenwich Associates, a Connecticut-based consulting firm. Money managers say their system of allocating trades pays for services they receive from brokerage firms -- such as when Goldman Sachs sends analysts like Abby Joseph Cohen to meet them -- and for the research reports firms generate. Fund managers say they try to use their leverage as customers to get the best service. ``Wall Street tries to run as if it's an off-the-shelf business and sometimes it needs customizing,'' said Michael Weiner, a managing director and fund manager at Bank One Investment Advisors in Columbus, Ohio, which oversees $130 billion. ``We don't want to make it an entitlement.' Speaking to a gathering of Wall Street executives in Boca Raton, Florida, the SEC chief last month set out to break the cycle. He said securities firms overcharge mutual funds with brokerage commissions for shares in the hottest IPOs. Commissions They will probably focus on subsequent trading commissions in excess of the traditional nickel a share that would appear to be ``side payments,'' said Coffee. Fund managers get access to IPOs because of trades they do on behalf of their investors, although that doesn't mean the IPO shares always go into the funds, Levitt said. ``Fund managers are paying their expenses with other people's money,'' Levitt said in the grand ballroom of the Boca Raton Resort Club at the Securities Industry Association's annual meeting. ``This plain fact seems to be lost on some advisers today, particularly where IPO allocations are concerned.'' The average mutual fund company paid $65 million in commissions last year, 58 percent more than three years ago, according to Greenwich Associates. Stamford, Connecticut-based McLagan Partners Inc., a unit of ASI Solutions Inc. that surveys money managers' trading, provides one of the only checks securities firms have that their clients follow through with promised trade allocations. McLagan keeps a low profile. ``We just don't talk about that study,'' said Brian Dunn, president of McLagan Partners. ``It's a very, very sensitive issue. If any of the participants heard we talked to anyone, at all, they'd pull out.'' While mutual funds said they rarely resort to cutting off a firm, they will to make a point. ``We put one big firm in the penalty box for a year,'' said Alan Brown, chief investment officer for State Street Global Advisors, which manages about $750 billion. ``They immediately noticed when the spigot was turned off.'' Just as money managers can cut off securities firms they don't think are providing enough service, they also can get cut off if firms decided they aren't being paid for their services. That doesn't happen often. ``Most people in this business are very honorable -- they remunerate you for your efforts,'' said Michael Benenson, head of institutional sales at Gerard Klauer Mattison & Co. ``It's sort of a un-written contract.'' Regardless of the SEC's probe, trades will continue to be the way Wall Street gets paid. ``If you're going to receive a service that's valuable, you're going to have to pay for it,'' said Jeff Leerink, chief executive of Leerink Swann & Co., a Boston-based investment banking firm dedicated to health care. ``Everyone understands that the mechanism of payment is trade execution.''

To: LPS5 who wrote (8550)	12/15/2000 8:11:32 PM
From: TFF	Read Replies (5) \| Respond to of 12617

Congress Passes Bill for Swaps, Single-Stock Futures Washington, Dec. 15 (Bloomberg) -- U.S. lawmakers approved legislation to slash rules for futures markets, end an 18-year ban on single-stock futures, and keep the government's hands off complex investments known as over-the-counter derivatives. The measure was included in a spending package the House passed 292 to 60 and the Senate approved by voice vote, capping years of struggle between Wall Street firms, futures markets, and stock exchanges over which markets should be regulated and by whom. The bill now goes to President Bill Clinton for his signature. The plan is good news for banks, futures exchanges and energy companies who say the U.S. will lose its share of the multitrillion-dollar futures and derivatives market unless they have more freedom. Lawmakers, regulators, and industry groups reached agreement just days before Congress is set to adjourn. ``It is intended to keep America on the competitive edge with our trading partners in this world economy,'' said Representative Tom Ewing, an Illinois Republican and architect of the futures bill. ``It also modernizes the system here so not only can we be competitive in our financial industry, but we can be profitable.'' Competing Interests The bill balances some of the competing interests of banks, futures exchanges and stock markets and the lawmakers and agencies that oversee them. Industry groups squabbled about who would be regulated the most, with the Securities and Exchange Commission backing the stock markets' concerns and the Commodity Futures Trading Commission siding with the Chicago Board of Trade and other futures exchanges. The compromise package takes legislation the House passed in October and adds two sections that prevent the SEC from regulating OTC derivatives known as swaps except in cases of fraud and manipulation, and keep the CFTC from overseeing derivatives sold by banks. Ewing and other lawmakers won the support of the Treasury Department and other regulators after months of negotiations. OTC derivatives are private contracts based on an underlying bond, security, commodity, currency or other asset. The face value of such contracts worldwide is about $94 trillion. Though similar to regulated futures, they aren't directly governed by any laws or rules, making it unclear how much power regulators have over how they are used. Bill Praised J.P. Morgan & Co. managing director Mark Brickell praised the legislation. ``The companies who rely on swaps as hedges and the financial institutions -- the banks, brokers and insurance companies -- with large swap portfolios now are more certain than ever that their contracts will be enforced and that they keep the benefit of the bargain,'' Brickell said. The legislation also implements a tiered regulatory system designed by the CFTC, with larger markets and investors receiving more freedom from regulation and smaller commodities being more protected. The agency now will adjust its new system to conform with the legislation. ``The CFTC worked closely with Congress and the futures industry to help design a regulatory structure that is tailored to the specific products and participants of a given market,'' the commission said in a statement. ``This approach will provide U.S. financial markets the flexibility needed to maintain a leadership role.'' In addition, the measure clears the way for both futures and stock markets to offer futures based on a single company's stock, such as Microsoft Corp. or Citigroup Inc. ``It's been a very long and arduous process, but I'm very please with the opportunity to trade this new product,'' said William Brodsky, chairman of the Chicago Board Options Exchange, in an interview. The CBOE, the largest U.S. options exchange, should be ready to offer single-stock futures a year after the legislation is signed, which is when the new law would let the investments be sold to the general public, Brodsky said.