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 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 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.
Analyst firm Forrester Research Inc. in Cambridge, Mass., estimates that there were fewer than 4 million online brokerage accounts at the beginning of the year. By 2003, Forrester estimates that 9.7 million U.S. households will manage more than $3 trillion in assets in 20.4 million online accounts.
This story, "New index measures online broker Web performance" was originally published by Computerworld.