New index measures online broker Web performance

By Nancy Dillon, Computerworld |  Software

Internet consulting firm Keynote Systems Inc. announced a new service yesterday
that tracks how long it takes online brokers to accept stock buy orders.

Called the target=NEW>Web Broker Trading Index, the free service tests 15 popular online
trading sites 24 hours per day, hitting each site four times an hour from 10
metropolitan areas. At the end of each week, Keynote plans to take the 21,000
measurements it has collected during the eight trading hours each weekday and extract
averages to come up with rankings. The report will be updated weekly on href="http://www.keynote.com" target=NEW>Keynote's Web site.

However, the index only tracks front-end Web site performance, not how well a buy
order is executed once a trade request is placed.

In the first Web Broker Trading Index published this week, top honors
for "Transaction Performance in Seconds'' went to Dreyfus Corp. in New York (7.47
seconds). ETrade Group Inc. in Palo Alto, Calif., fared worst in that category with a
performance time of 38.35 seconds.

First place for "Transaction Success Rate" went to Brown and Company Securities
Corp. in Boston, which had a 99.3% success rate. Suretrade Inc. in Lincoln, R.I., took
last place in that category with a transaction success rate of 46.7%.

"The whole point of trading online is to trade live," said Dan Berkowitz, director
of communications at San Mateo, Calif.-based Keynote. "Otherwise, why do it? Go to a
broker."

But analysts cautioned that load speed isn't the most important criteria for an
online broker.

"While the data generated are revealing, the issue here is just what makes
for 'success'?" said Jack Staff, an analyst at Zona Research Inc. in Redwood City,
Calif. "For instance, two of the leading online brokerages, Charles Schwab and ETrade,
had performance times of 30.03 and 38.35 seconds, respectively. But that might be
expected since they handle so much more relative volume compared with Dreyfus and
Scottrade, the two fastest.

"Our view is that the best measures of online brokerage success are trade volumes
and revenues generated, rather than the speed of the servers processing the business,"
Staff added. "Add to these the deep impact e-branding has in users' habits and we
suspect these numbers may be less important than their developers would like us to
believe."

Two prominent online trading sites not yet included in the Keynote report are those
of New York-based Donaldson, Lufkin & Jenrette Inc. and Datek Online Holdings Corp.
in Iselin, N.J. Officials at Keynote said they hope to have both brokers added to the
study sometime this summer.

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