Setting the timer for online brokers
Online investors can now track how fast a broker processes a trade as easily as they compile statistics on a favorite baseball team.
San Mateo, California-based Web site performance monitoring firm Keynote Systems has begun posting a free weekly report called the Web Broker Trading Index that helps online investors keep score of their broker's performance.
The company said the information is intended to help consumers pick an online trading firm, and help brokers monitor and improve service provided to the hoard of new Internet traders.
Between June 1 and June 4, Keynote reported Dreyfus was the fastest broker, taking just 7.47 seconds to complete a transaction, with Scottrade in hot pursuit, completing a trade within 7.68 seconds. For the time period, Brown & Co. delivered the top transaction success rate of 99.7 percent.
Meanwhile, E*Trade ranked dead last in the survey as the slowest of all brokerages, taking an average of 38.35 seconds to complete a transaction--which entails letting a user log in, check a quote, and file an order. E*Trade could not be reached for comment.
Ironically, consumer e-commerce hub Gomez Advisors last week named E*Trade the top Internet broker for summer 1999, noting the company's site was easiest to use, has the best relationship services and investor profiles, and the most depth of any service.
Online trading has exploded over the past quarter -- growing a record 47 percent to 500,000 trades a day from the fourth quarter of 1998 to the first quarter of 1999, according to a Credit Suisse First Boston report.
"Online trading firms now appear to be penetrating the mass markets, not just the techno-philic early adopters," analyst Bill Burnham at the securities firm, stated in a research report.
Almost 16 percent of all stock trades now take place online, he said.
By the end of the year, about 40 percent of traders will open more than one account with online brokers, Keynote spokesman Dan Berkowitz said. To date, Keynote has offered an index that measures the download time to access Web-based brokers' home pages. Keynote recently decided to replace it with the more detailed information this week that also measures reliability and performance.
For its index, Keynote measures the average time required to create stock buy orders on 15 online trading sites from ten cities around the United States. Glaringly missing from the list, however, is the popular Datek site. Berkowitz said the firm plans to add Datek and others to the list as soon as the necessary paperwork to open a trading account with them is completed. Including Merrill Lynch and PaineWebber, the firm intends to bring the total number of sites tracked to about 26.
Rob Sterling, digital commerce analyst at New York-based Jupiter Communications, said he knows of no other company offering such a detailed report on brokerage performance. Keynote's Web Broker Trading Index measurements are performed every 15 minutes using automated measurement computers connected to the Internet using T-1 communication lines. More than 100,000 transaction measurements are completed each week for the 15 sites.
"It's an interesting model," he said. "It's a hot topic."
But the firm's scope is narrow, limited to measuring performance instead of services offered or price--other areas that concern consumers, he said.
The top five U.S. Internet brokers -- Charles Schwab, E*Trade, Toronto-Dominion Bank's Waterhouse Securities, Datek Online, and Fidelity Investments -- had a 71.3 percent market share, up from 67.5 percent a year ago, according to Credit Suisse.