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Datek Online Brokerage Services

01/26/01 10:49:52 AM PST
by Working Money Magazine

Datek Online Brokerage Services, LLC, one of the largest online brokerage firms in the US, is committed to providing individual investors with the same tools and opportunities available to institutions and professional investors. The company is an industry leader in offering fast and efficient trade executions, free streaming quotes, extended-hours trading, low commission rates, and extensive educational tools. Datek Online also was the first major online brokerage firm to rebate the payments it receives for order flow to its customers, and the first to offer trading in decimals.

FIGURE 1: TOTAL CUSTOMER ACCOUNTS. Datek Online has been growing rapidly. Funded customer accounts increased from 290,000 in third-quarter 1999 to approximately 624,000 in third-quarter 2000.

Execution speed.
Datek Online's advanced technology platform is designed to provide timely, reliable executions. The company backs up its commitment to fast trade executions by waiving its commission if marketable orders are not executed within 60 seconds (restrictions apply).

Free real-time streaming quotes and account information.
Datek Online was the first major online brokerage to offer free real-time streaming quotes to any nonprofessional investor with an Internet connection. The company's Streamer allows investors to track bid, ask, and last prices and other information for lists of stocks in real time without having to refresh the page and without special software. Datek Online was among the first in its industry to offer real-time portfolio updates and account balance information.

First major online brokerage to offer extended trading hours.
Datek Online allows customers to trade Nasdaq stocks for 12 uninterrupted hours, from 8 am to 8 pm Eastern time. Extended-hours trading enables customers to execute trades from their homes and permits West Coast residents to trade well into the afternoon. In addition, Datek Online customers have been able to act on news disseminated after the close of traditional markets.

First major online brokerage to offer trading in decimals.
Because they can trade in one-cent increments, Datek Online customers have a significant advantage over those who are forced to trade in larger increments.

Low-cost commission.
Datek Online has the same $9.99 commission for both market and limit orders. This simple pricing structure, which is easy for customers to understand, covers online transactions of up to 5,000 shares for all stocks that trade on the New York Stock Exchange, Nasdaq, or American Stock Exchange. Datek Online is able to execute trades at a low price because of the technological efficiencies inherent in its advanced trading platform.

Partnerships with and The Motley Fool illustrate the company's commitment to educating investors. Datek Online is dedicated to empowering individual investors through education so they can make informed decisions. The partnership with, SmartMoney University, is centered on a free, fully interactive, educational website for investors of all experience levels. Together with The Motley Fool, Datek Online offers Investors Insite, a monthly reference newsletter that offers information on investing and the markets.

Rebating payments for order flow.
Payment for order flow is a controversial practice that has been questioned by regulators because it appears to place a broker's profitability ahead of providing customers with the best possible execution. To demonstrate its commitment to obtaining best execution, Datek Online is passing on all payments it receives for order flow to its customers. Using proprietary technology, Datek Online automatically routes customers' orders to their best execution point, irrespective of order flow considerations.

Datek Online, located on the World Wide Web at, is one of the fastest-growing brokerage firms in the United States (Figure 1). The company, which began operating in June 1996, currently has around 624,000 funded accounts, which execute approximately 98,000 trades each day. Average aggregate customer assets rose from $7.2 billion in third-quarter 1999 to $14.8 billion in third-quarter 2000 (Figure 2).

FIGURE 2: CUSTOMER ASSETS. Average aggregate customer assets rose from $7.2 billion in third-quarter 1999 to $14.8 billion in third-quarter 2000.

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