ONLINE TRADING
Outfits like E*Trade and Ameritrade have made online investing as easy as shopping at Amazon.com - then again, to buy stocks, you have to keep a few thousand bucks tied up in a brokerage account. TradeCast has devised a workaround. The Houston-based daytrading brokerage's latest app, TradeCast FI, lets you buy stocks over the Internet with money from your bank account.
TradeCast FI is based on programs developed by TradeCast that connect Internet-enabled traders directly to ECNs via the company's own server, but with a crucial difference: TradeCast FI plugs into the private banking network that links ATMs and debit-card readers to 26,000 US financial institutions. When you make a trade, the software debits your bank account and shifts the money temporarily to a brokerage account (as required by the SEC). The app instantly transfers the money to an ECN and dings your bank account for a $14.95 transaction fee.
Why would the staid banking industry want to consort with the wild-and-woolly daytrading crowd? A better question might be, can it afford not to? Since 1980, banks have lost more than half of their household assets to "other investments," according to 1999 Federal Reserve Board data. And the ebrokers aren't stopping there. Charles Schwab acquired US Trust in January, and E*Trade began issuing checking accounts in April.
TradeCast CEO Bobby Earthman is positioning the new product as a way for old-line banks to fight back. Instead of offering TradeCast FI to his brokerage customers, Earthman is hoping to entice banks to distribute it through their Web sites. Banking partners will take a share of brokerage fees, while TradeCast potentially gains access to millions of bank account holders across the US. "We're really in the transaction business," Earthman says. "We'll let banks do the marketing for us." TradeCast's first partners, Sterling Bank and Northwest Bank, both based in Houston, began beta testing in November.
Of course, direct-debit investment won't really take off until the banking powerhouses sign on. But if they do, can trading shares through an ATM machine be far behind? "In Charleston, South Carolina, you can use a debit card to buy a hamburger at Burger King," Earthman says. "Why should securities be any different?"
- Rick Overton (riverton@mindspring.com)
TradeCast: www.tradecast.com.
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