Brokers Enjoy a Productive Summer

What’s new at TD Ameritrade, and Lightspeed. Plus, the SEC begins probing dark pools.

THOUGH IT’S SUMMER, THE MAGICAL ELVES WHO keep online broker sites up-to-date are hard at work. Here are a few of their new offerings.

TD Ameritrade (http://www.tdameritrade.com) wasted little time incorporating technology created by recently acquired thinkorswim (http://www.thinkorswim.com) into its platform. The purchase closed on June 11, and on June 27 a small group of TD Ameritrade customers was invited to try out the thinkorswim release for TD Ameritrade clients. The software will be offered to customers on a rolling basis over the summer.

I was concerned about the pace of innovation at thinkorswim once the firm, co-founded by Tom Sosnoff, now senior VP of TD Ameritrade’s Trader Group, was absorbed. The release notes, sent to thinkorswim customers, take a cheeky swipe at the doubters, saying: “And you thought we were done. Some of our developers were thinking that this little acquisition meant it was going to be a summer of mashing buttons playing World of Warcraft with a case of Red Bull and Domino’s Pizza on the speed dial. Sorry, kids. The game is still on, and the playing field just got bigger. Get your helmet on, because genius never sleeps. And it’s scalable!”

Thinkorswim spiffed up its charting application, adding features such as Fibonacci time ratios, Fibonacci time extensions and vertical time levels—graphical tools used to predict price changes. Keyboard shortcuts were added for Mac users. Those who want a sound to play when an alert is set off can now customize those noises. And you can now set up templates to allocate a trade across multiple accounts. All the details are listed at http://mediaserver.thinkorswim.com/notices/Release_062609.html.

The Vanguard Group, which allows retail investors to trade mutual funds, stocks and ETFs at http://personal.vanguard.com, has integrated Scivantage Maxit to provide automated cost-basis reporting and tax-management capabilities. Maxit allows investors to track capital gains, generate an IRS Schedule D for tax filing and manage investment tax decisions.

Maxit is a terrific tool for creating customized tax reports for realized and unrealized gains and losses, not only for mutual funds and stocks but also options and bonds. The program makes automated basis adjustments for corporate actions, including complex voluntary actions, and can also identify and adjust for wash sales. TradeKing (http://www.tradeking.com) and OptionsHouse (http://www.optionshouse.com) have offered Scivantage Maxit to their customers for several years.

Interactive Brokers (http://www.interactivebrokers.com) recently launched stock trading on the National Stock Exchange of India. IB has had access to Indian futures and options since the spring. Commissions for Indian stocks are five basis points per transaction (with a minimum of 75 Indian rupees, or about US$1.55), plus securities-transactions costs, exchange charges, stamp duty and service tax. IB’s Trader Workstation allows investors to view, trade and manage risk for multiple global asset classes from a single screen.

Another IB announcement addresses a weakness we’ve noted in several annual reviews of online brokers—portfolio analysis. IB has rolled out a beta version of PortfolioAnalyst that lets customers slice and dice their portfolios and view performance over different time periods. For advisors, brokers, managed funds and proprietary trading, the tool has the ability to view combined or separate accounts.

Says spokesman Andrew Wilkinson: “Essentially our plan is to create and give away for free the same functionality that is provided by third-party portfolio-management systems at a hefty price.”

Lightspeed Trading (http://www.lightspeed.com) launched Lightspeed Forex last week, using technology developed by GAIN Capital, a global provider of online foreign-exchange services. Said Stephen Ehrlich, chief executive officer of Lightspeed Financial: “As the dynamics of the U.S. capital markets have significantly changed over the past several months, traders have begun requesting alternatives, including a foreign exchange offer, to diversify their trading strategies… .”

The GAIN Capital platform is a downloadable trading interface that can be customized extensively. It includes an order-management system, fast market data, and advanced charting functionality. Lightspeed customers can analyze and trade 38 currency pairs including the U.S. dollar, Japanese yen, euro, British pound, Swiss franc, Canadian dollar and Australian dollar.

Lightspeed clients can download a free trial of Lightspeed Forex at the following site: http://www.lightspeed.com/forextrading-973.ls, and participate in forex-focused discussion groups within Lightspeed Spotlight.

Dark Pools Redux: Our column on dark pools ("Shedding New Light on Dark Pools,” June 29) generated quite a bit of reader feedback. So it is with great interest that we noted Securities and Exchange Commission Chairman Mary Schapiro’s testimony before the House Committee on Financial Services’ Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises. Dark pools, you’ll remember, are private institutional markets that trade large numbers of shares outside of normal stock exchanges. Anonymous participants can enter orders that, if matched by others in the pool, get executed.

Last Tuesday, she testified that the SEC staff has begun exploring transparency issues related to dark pools. Said Schapiro: “We have heard concerns that dark pools may lead to a lack of transparency, may result in the development of significant private markets that exclude public investors (through the use of ‘indications-of-interest’ that function similar to public quotes except with implicit pricing), and may potentially impair the public price discovery function if they divert a significant amount of marketable order flow away from the more traditional and transparent markets.”

I’m pleased to see that the SEC will be checking out dark pools with a focus on transparency. My main concern is that their existence removes a great deal of liquidity from public venues and may result in incorrect pricing. Good luck, SEC and Chairman Schapiro.

Posted by on 07/25 at 03:19 AM

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