Saturday, July 08, 2006

Tears at Waterhouse

This is the second column that I changed somewhat from the print edition of Barron’s.  There are two reasons for the change this time:  fixing the error that started in the June 19 column, and fixing a change made by an editor that insulted some readers.  You can see what was printed in Barron’s by clicking on the link at the end.

AMERITRADE’S INTEGRATION OF TD WATERHOUSE customers into a combined trading platform has caused significant pain to some of the newcomers. Over the weekend of June 17, TD Ameritrade implemented a security upgrade as it linked the two systems. Unfortunately, the hoped-for improvement caused problems, some of which prevented former TD Waterhouse customers from logging into their accounts.

A number of frustrated legacy TD Waterhouse clients described the situation in various grades of invective in e-mails to Electronic Investor (electronicinvestor@yahoo.com).

What actually happened, according to TD Ameritrade’s corporate communications manager Donna Kush, was that the TDW customers were routed to a new login page that had additional security features. Under the old system, the investors could opt to store their user IDs, which are made up of a long string of numbers. But the automatic ID storage was disabled at the new page. So folks who were used to having their computer enter those numbers for them had to dig out the account number and type it in again—and again and again. The new system, in keeping with the added security, doesn’t store account numbers.

Ameritrade also experienced what Kush calls “some technical issues” that prevented a number of former TDW clients from logging into their accounts on Monday, June 19. She reports a backlog of customer-support calls on Monday, but says that volumes dropped off as the week wore on.

Kush says that TD Ameritrade fixed the problem as quickly as possible, and changed its software on June 21. “We expect that will help improve the situation,” she says. “We’ve also contacted affected clients by e-mail and phone to apologize and explain the issue. We’ll continue to give them updates,” Kush says. Adds her TD Ameritrade colleague Kim Hillyer, “The technological fix has provided significant improvement, and most clients should now have a completely normal log-on experience.”

Clients who can’t log on using the Web have other options—visiting one of the company’s offices or utilizing its touchtone trading system. However, those options cost more than the $9.99 for online stock trades—phone trades are $34.99 and a broker-assisted trade costs $44.99. Hillyer says the company will deal with each customer individually regarding any additional charges.

I reviewed some of the message boards that discuss TD Ameritrade at Yahoo! Finance and saw a lot of expressions of anger. I’ve also gotten e-mails asking how long it takes to get an account moved to another broker. One piece of advice: That process is time-consuming and can incur fees, so it shouldn’t be done lightly or out of momentary anger. Frustrations are bound to occur as firms with different technologies integrate. You can move your account prior to integration—but that’s no guarantee of satisfaction. Besides, given the wave of industry consolidation, your new broker probably won’t remain independent forever.

Professional Money Managers with a broker and clearing arrangement set up are the target market for SDS Trader, published by New York-based SDS Financial Technologies (http://www.sdsft.com). SDS Trader provides financial information and trading-related services for brokers, traders, exchanges and corporate clients. It’s a market-data and trading platform that lets customers—both professionals and frequent individual traders—view, manage and place transactions. Retail clients can purchase SDS Trader from On Point Executions LLC (http://www.onpointx.com) and Raymond C. Forbes & Co. (http://www.rcfco.com/index.html).  Once the accounts are defined, the user can get a variety of quotes for stocks, options, futures, commodity and currency options, bond chains, stock derivatives, Treasury bonds and more.

The package contains a traditional charting system with advanced analytics that are easy to change and customize. One feature we liked was Quadrant Chart, which lets you define four charts that will be displayed simultaneously. You could have one chart with real-time tick-by-tick data, another with monthly data and trend overlays, and two others displaying analytics.

The program shows its power in the trading platform. You can create order routing preferences in the Broker Preference screen, including specifying preferred exchanges. You can also restrict the routing to exclude certain destinations, such as an electronic communications network, or ECN, with high fees or a bourse that doesn’t offer much price improvement.

Original published in Barron’s, July 3, 2006.

Posted by twcarey on 07/08 at 12:53 PM
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