Saturday, July 02, 2011
Traveling to Europe at Lightspeed
The professional trading site expands abroad, while E*Trade, TD Ameritrade and Fidelity win mobile honors. And an interesting new iPad app from Interactive Brokers.
Lightspeed Trading, an online broker aimed at professional traders and smaller hedge funds, has been on a buying spree. The most recent acquisition, its sixth in the last five years, is the Irish unit of Lime Brokerage International. This purchase gives the firm entrée to all of Europe.
"We think there’s a growing appetite of active traders in Europe who want access to the most liquid markets in the world,” says Stephen Ehrlich, Lightspeed’s CEO. The initial phase of the acquisition will allow European customers to trade in the U.S. markets.
Ehrlich reports that his firm gets about 1,000 requests a month from European traders, and is pleased that Lightspeed (http://www.lightspeed.com) will soon be able to fulfill that apparent need. The second phase of the integration would allow U.S. traders to trade European markets; Ehrlich expects that to happen in the latter half of 2012 or early 2013. “Having the broker/dealer license in place gets us started, and gives us credibility in those markets,” Ehrlich says.
Most of its previous purchases have been aimed at acquiring technology, but Lightspeed’s geographic expansion is a very timely one, based on our soundings. When we recently asked the trading community what areas of retail investing would grow fastest over the next 10-15 years, several pointed to international markets ("A Crystal Ball for Online Trading,” June 6).
Lightspeed expects to differ from internationally focused outfits such as Interactive Brokers (http://www.interactivebrokers.com) with technology as well as competitive pricing. Because it lacked the appropriate broker/dealer license, Lightspeed wasn’t able to market itself in Europe. Now it can.
One key aspect to the purchase is Lime’s “passport” license that allows it to operate all over Europe. Once the regulatory hurdles have been cleared, Ehrlich expects to tap into the large pool of local financial technology talent. The Irish subsidiary of Lime (http://www.limebrokerage.com) is currently dormant, so Lightspeed will be restarting the business from scratch.
ANOTHER FAVORED TREND was mobile applications. Corporate Insight (http://www.corporateinsight.com), which provides competitive intelligence to the financial-services industry, recently published a report entitled “Money on the Move: Mobile Finance Review 2011.” We were given a peek at the report; a summary is available from Corporate Insight’s Website.
The analysts at Corporate Insight talked with 100 financial executives who are clients. More than two-thirds of the respondents said that mobile financial apps have had a “somewhat positive” or “very positive” impact on their firm’s business. Of interest to readers of this column: “Every executive we surveyed believes that their firm will have an improved mobile offering in the next 12 months as they continue to develop new platforms and features.”
The report notes that the fastest-growing area for mobile financial apps is the iPad. In May alone, Merrill Lynch/BofA, Chase and Vanguard have all launched new apps for that platform. Mobile capture of check images also began that month for Fidelity and Schwab customers. Corporate Insight lists E*Trade, TD Ameritrade and Fidelity as leaders in offering mobile apps to their self-directed clients.
COMBINING BOTH FOREIGN and mobile interests, Interactive Brokers has translated its Traders Workstation (TWS) application to the iPad. The international broker launched an iPhone app, iTWS, in 2010, but the new version isn’t just a photo-enlarged version. It’s a much easier implementation of the TWS than you can get on your computer, and really takes advantage of the iPad’s available real estate. You can see streaming quotes and charts, place trades, and monitor your account on iTWS.
IB’s market scanners are also built into iTWS, which you can run or edit from the device. For example, you can check out the most active stocks in Europe or Asia. Trade alerts can be customized so that you are notified of executed trades that originated from your desktop as well as your iPad.
If you create a “paper trading” account with IB, which lets you test the features of applications without placing real trades, you can also check out iTWS without risking any of your cash. The iPad app does force you to log out of the desktop application, so you can only have one device logged into your account at a time. This may be inconvenient, but it’s a good security measure. The app will log you out after 10 minutes of inactivity as well.
Not all of the dozens of order types available on the software platform can be used from iTWS, so this version is not going to replace the computer-based TWS. If your account contains more than 50 positions, you’ll only be able to see the top 50.
Published in Barron’s, June 27, 2011.