Free Online Trading: Too Good to be True?

August 30, 2000

Abstract

Cambridge, MA, USA,  August 30,  2000  

Free Online Trading:  Too Good to be True?  Report Published by Celent

Competing mainly on the basis of execution price is no longer a viable option for most online brokerage firms. While retail investors still do look for affordable execution prices, most are willing to pay a little extra for a brand name and extensive content and research. The latest salvo in the commission war is the emergence of completely free online trading. A handful of firms have begun to offer low -- in fact, nonexistent -- execution pricing to attract independent, Internet savvy retail investors. In a report, titled "Free Trading -- Too Good to be True?" Celent Communications examines the recent online brokerage phenomenon of commission-free trades. The report provides detailed analysis of the four online brokerage firms currently providing commission-free trades and identifies the possible impact this may have on the overall industry.

Members of Celent Communication's Retail Securities & Investments research service can download this 20-page report electronically by clicking on the icon to the right.

"Commission-free trading represents good opportunities for those retail investors looking for the cheapest possible execution price," noted Sang Lee, an analyst at Celent's Trading group. "However, those brokerage firms building their entire business model on the concept of free trading without offering a robust suite of research/content and reliable customer service will quickly find that there is no such thing as a free lunch."

A Table of Contents is available online.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

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August 2000 Return to Abstract of this report.

 

EXECUTIVE SUMMARY

 3

INTRODUCTION

 4

MARKET OVERVIEW

 5

 

Industry Trends

5

 

Commission-Free Trades

 7

PROVIDERS

9

 

American Express

 9

 

The Financial Cafe.com

 10

 

FreeTrade.com

 13

 

FreeTradez.com

 14

PROVIDER COMPARISON

16

FUTURE TRENDS

19

        

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