Power Brokers Race to Trade On International Markets

Computerworld - The Internet has brought the world many things, and soon direct stock trading on foreign markets will be among them.

Yet what's behind that split-second ability to buy a stock listed almost anywhere in the world is a lot more than the modem and ETrade account a customer may see. It's a lot more than global adoption of IP, fiber-optic lines and common schema for XML, too.

It's a battle being waged on Wall Street, as the giant U.S.-based stock brokerages and their newer online competitors jostle for alliances to open their services to customers in new global markets. It's about regulatory bodies and the different broker standards used to try to curb fraud. And it's about language - of finance, technology and tongues besides English. And oh, yes - it's also about money.

DLJdirect Inc. in Jersey City, N.J., was among the first U.S. brokerages to offer online services in Europe last summer, according to New York-based Jupiter Communications Inc. Like other nimble ventures such as Palo Alto, Calif.-based ETrade Securities Inc. and New York-based TD Waterhouse Group Inc., the online unit of New York-based Donaldson, Lufkin & Jenrette Inc. beat its larger rivals to the punch. Those companies have had customers and offices all over the world for years but were slower to move online abroad for the same reasons as in the U.S. - channel conflicts, legacy systems and a commitment to high-net-worth and high-touch customers.

The first traditional brokerage that was able to cross over - paralleling its successful strategy in the U.S. - was San Francisco-based The Charles Schwab Corp., which had operated off-line in Europe for many years, said Jupiter analyst Nick Jones. In fact, he said, Schwab pioneered online trading in the European market when it launched Charles Schwab Europe in April 1998.

"Traditional institutions [like Schwab] that are able to successfully launch an Internet strategy as part of their standard operation, rather than relegating it to the sideline of business, will do the best," said Dana Stiffler, an analyst at Newton, Mass.-based Meridien Research Inc.. Schwab officials declined to be interviewed.

Paths to the Web

But in Internet time, Schwab's early success is almost history, as its competitors race to catch up.

There are several paths. One is trod by global giants like Merrill Lynch & Co., which plans to leverage customers, overseas experience and brand recognition by Web-enabling existing brokerage services - though no online trading is yet available to customers overseas. Another is that of an affiliate of The Timber