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TRADING ONLINE
Consulting firm Forrester Research estimates by the end of 1997 there were three million cyber-trading brokerage accounts, and expects there will be more than 14 million by 2002.
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ONLINE IPOS
In Canada, there's a site called TEICA, which says it has received approval to act as a go-between for small companies looking to raise capital.
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ILLIQUIDITY
One online offering site used to contain a disclaimer stating that "The securities listed on the Internet Capital Exchange are fairly illiquid and inherently risky. Good advice.
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E*TRADE used to be the cheapest, but new challengers are springing up every day, including eBroker, Datek and AmeriTrade. Charles Schwab, the leading discount broker, is also a player -- as is Boston mutual fund giant Fidelity. There's also an E*Trade Canada, which offers stock trading as well as selling no-load mutual funds, and other online trading sites include Hongkong Bank's NetTrader and Toronto-Dominion Bank's Webbroker.
The next step after giving a broker buy and sell orders through a Web site is to use the Web to bypass brokers entirely and use the Web as an actual online stock exchange. The first to really advance this idea was a U.S. microbrewery called Spring Street Brewing Company, which started by allowing shareholders of its stock to trade shares over an online bulletin-board system attached to its Web site. Spring Street president Andrew Klein, a former Wall Street lawyer, then created a totally electronic Internet offering and trading company called Wit Capital.
Several other companies have set up sites aimed at taking companies public using the Web. A company called IPO Net already has several new issues and private placements available online, and there's a relatively new one called IPO.com. In December, E*Trade announced that it had just moved into the online stock offering business by floating a share issue for Sportsline USA, as part of E*Trade's agreement with brokerage Robertson Stephens.
As for tracking new issues, the company that publishes the Hoover's Handbook of financial information runs a site called IPO Central that keeps track of recent IPO issues, as does IPO Monitor. Alert-IPO is an automated site that for $34.95 a year will send you an e-mail listing of all the companies that have filed for initial offerings with the SEC, and a weekly analysis of the new issues. A site called IPO Data maintains a list of companies that have used the Internet to go public. Here's a recent article about an Internet IPO, and this is a piece that the magazine Red Herring had recently about the whole phenomenon.
Despite the potential for scams, investing and the Net continue to become more intertwined (for more on scams, check out the Stock Detective). You can already trade stocks over the Net. This is really just an evolution of the way stock trading is done already -- professional brokers have used electronic terminals for years. All the Internet has done is to bring this down to the level where anyone with Net access can take part in it. If you have any comments or additions, feel free to mail me.
The current leader in online trading is probably E*TRADE, which offers Web-based trading and also online access to IPOs and secondary offerings. The winner of a survey of online brokers by Barron's magazine for three years in a row was a brokerage called Lombard, which is now part of Morgan Stanley and is called Discover Brokerage Direct. At the PAWWS site (owned by CheckFree Corp.) you can trade through a couple of brokers, including Howe Barnes' The Net Investor.
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