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Non-Tech : Web Street Securities (WEBS) -- Ignore unavailable to you. Want to Upgrade?

To: wlcnyc who wrote (604)	8/9/1998 7:16:00 PM
From: Len	Read Replies (1) \| Respond to of 1339

He is disclosing, (as he must, according to SEC rules) that he "may" receive payment for order flow. He is also telling you to check your written confirmations, where a code is usually appended to each trade, showing you whether they acted as "principal" in the trade, or in "agency." It should also tell you whether they received payment for that order. Principal means that you either bought the shares from, or sold the shares to, them (or the MM they received payment from). Agency means they acted as your agent, merely facilitating the trade for you. Agency is what ALL your trades should be done as, if you want to be sure of your broker's complete independence. However, nowadays, it is quite hard to find a broker who doesn't sell their order flow. That's how so many can charge such low commissions. But there are a number of them that don't. Depending on your trading style, and your individual needs, you need to decide which is best for you. For some people, they don't mind that their broker makes a little extra, maybe because they don't want to bother looking for another broker, gets fast executions, great customer service, etc. If that's the case, you have to remember that market orders with these brokers is basically a license to steal, as you will never get the best price, no matter what they tell you. Limit orders gives you some protection from being raped, but in those cases, you may not get filled at all, if the MM doesn't feel like it, and can get away with it. However, if you want the best possible executions, then you go to a broker that guarantees that they never receive payment for order flow. There are some electronic firms that claim not to, and there are other phone based brokers who claim the same. For instance, Yamner and Company claims to actually "work" your order to try to get price improvement. Their head trader, Steve Goldman, has a thread here on SI, called "From the trading desk." Check it out. (I have no experience with them, so I can't advise, but others on the thread have.) I'm not shilling for the company, but I guess I am shilling for the thread,<g> since he imparts a lot of good information that is independent of his company. Discussions of the markets, order flow, and lots of other good information can be found there. Hope this helps.

To: wlcnyc who wrote (604)	8/9/1998 8:31:00 PM
From: Gorak Shep	Read Replies (3) \| Respond to of 1339

wlcnyc, I know you weren't touting Empire. I have no connection to Empire whatsoever but merely wanted to clarify the limitations of their "free" trades. I always hate it when someone (Empire in this case) says something is free but then tacks on other charges. There are other brokerages who advertise $12 commissions and then, in the fine print, add in $3 postage/handling. Anybody who portrays themselves this way are immediately on my ignore list. As for your question about payment for order flow at Web Street, let me answer it this way. The only reason for a customer to be concerned about whether the broker is paid for order flow has to do with how this impacts order execution. Payment for order flow generally limits the attempt at execution to one or a few market makers rather than the entire range. Consequently, the order may have less chance of an execution or may be executed at an inferior price. Since most of Web Street's orders go through one market maker (Nash Weiss), it has the same problems as payment for order flow regardless of whether Web Street actually receives payment for it. So, you may never know whether Web Street receives payment but it really doesn't matter. The end result for the customer is the same either way.

To: wlcnyc who wrote (604)	8/9/1998 9:30:00 PM
From: wlcnyc	Read Replies (1) \| Respond to of 1339

To any SI members who might have felt "special" because of Jon Rosenberg's offer, on behalf of Web Street, to SI Members - You really shouldn't feel so special! Here's the offer to SI members: "To let SI members know of our commitment to customer satisfaction, we are offering any OTHER silicon investor member who becomes a new customer of Web Street a $100 commision credit upon the opening of a new account by August 15, 1998. (Please write "SI Member" on account application)" Message 5439185 Now, here's the offer that I received in an E-Mail completely unrelated to my SI membership: "Join Web Street Securities now and start trading online. Open an account within the next two weeks and Web Street will credit your account with $100 Commission Cash FREE at webstreetsecurities.com. So it appears that his offer is not at all related to this thread or even SI. It also appears that it isn't necessary for you to write "SI Member" on account application" after all. IMHO, he used this unfortunate incident as an opportunity to make a "special" offer to us (excluding that "OTHER" member, of course) that wasn't so special after all. How sad..... Bill