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Non-Tech : E*Trade (NYSE:ET) -- Ignore unavailable to you. Want to Upgrade?

To: Rick McDougall who wrote (4477)	1/26/1999 5:24:00 AM
From: ecommerceman	Respond to of 13953

I thought this report was interesting, and further proof that ETrade's problems are in no way confined just to ETrade. "Online brokers are on the verge of their biggest PR problem since October 1997. Faced with a market as hard to handle as a 2-year-old in mid-tantrum, online brokers are straining to serve customers. As a result of the volume and volatility, for the first time since the 1997 crashlet, the industry soon may be at risk of turning off potential customers, says analyst Bill Burnham at Credit Suisse First Boston. Given this, it was no surprise that the trio of online broker tech people were humble Wednesday when they spoke before a packed workshop at the Securities Industry Association Internet Update Conference in New York. The techies from DLJdirect, Waterhouse and Datek had similar lists of problems facing online brokers. Unpredictable traffic spikes, lack of control over the Net and customers' PCs and Internet connections and difficulty testing and making changes on the run are aggravating their ability to deal with tremendous growth. The recent storm of customer complaints raise the question of whether online trading is compatible with the habits of today's investors. For example, customer inexperience with the Web and with trading fast-moving stocks can lead to problems full-service brokers may not experience. Customers could, for instance, accidentally pile up orders in the same stock or try to cancel trades after they've been executed. While the problems may not be the brokers' fault, they tend to get blamed. Recently, Waterhouse removed 11 Internet stocks from online trading. And Charles Schwab won't let customers trade certain (often Internet) IPOs online on their first day of trading and asks that change or cancel orders in fast-moving stocks be placed with a live representative. The aim is to protect customers from poor order choices or mistaken trades. John Mullin, Waterhouse's senior vice president of electronic brokerage development, said the problem is that the broker hasn't figured out a way to adequately present the risk of trading volatile stocks to customers. At some point, with better awareness, he hopes customers will be able to trade all stocks online again. And the Internet itself -- with traffic congestion and lost data -- can hurt online brokers. Anthony Naughtin, CEO of InterNAP Network Services, which provides Internet connections that aim to bypass Net congestion, says Internet connection quality is just as important as a broker's trading system. But Internet improvements aren't coming as quickly as customers are coming online, says Mullins. Despite these issues, the top two brokers feel they are serving their customers well online. Both Schwab and ETrade credit their Internet trading systems -- designed to take advantage of automation and minimize human intervention -- for dealing well with the volume and volatility. "It's actually a proof of the system," says spokeswoman Lisa Nash at ETrade. Unfortunately, customers have higher expectations for technologically complex Internet trading than they do for phone trading, says Suresh Kumar, DLJdirect's chief technology officer."