Wireless Trading Makes the Mainstream
You know a financial service has come of age when it is featured in advertising on television and in major news magazines: Wireless trading is now mainstream. Prices are lower, coverage is better, the infrastructure is larger, and a new generation pager, the RIM950 Inter@ctive pager from Research In Motion (RIMM-otc), is the favored communication device.
It has been two years since I tested an earlier version, the RIM 900, on a trip up the East Coast. Since then, the device has undergone radical improvement, so I decided to take another look at two-way paging and some of the financial and trading services available.
The new RIM950 is a remarkable piece of technology. Half the size and less than half the weight of its predecessor, it compresses a 31-key qwerty keypad, eight-line display, and two watt transmitter/receiver into a standard sized pager less than one inch thick and weighing less than five oz (w/battery). More remarkable, it uses an Intel 386 processor with up to two megabytes of memory-the equivalent of a full desktop PC a few years ago-and can run for two to three weeks on a single AA alkaline battery.
With the RIM950, users can compose and send e-mail messages, faxes, and even send written messages to ordinary voice phones (which are read to the recipient by computer synthesized voice). Users can receive messages-up to 2700 words-from other pagers, from Internet e-mail, and even from voice phones using an operator-assisted service. And, of course, one can receive any data that a provider wants to package.
RJ Forbes, a New York-based discount broker, began offering online trading two years ago using a system jointly developed with its clearinghouse, U.S. Clearing. To add wireless trading, Forbes recently signed-up with W-Trade. Bill Mastrodicasa, Forbes' President of Electronic Brokerage Services, notes that even though Forbes has yet to actively market wireless access, they have received positive feedback from existing customers. The only problem he sees is that the monthly fees ($30 to $64/month, depending on the device) plus the initial purchase price of the wireless device, may strike many discount brokerage customers as too expensive. "After all," he notes, "a lot of those people are here to get those $10 trades."
The infrastructure behind wireless financial trading relies on an innovation in the cell network. Widespread wireless access has only recently been economically feasible because of the development of packet-switched network transmissions that can operate on top of a cellular system originally designed for voice traffic. Conventional circuit-switched voice traffic circuits are normally ill-suited for financial trading applications because they tie up a line (and run up connect charges) whether data is being transmitted or not. Being "always on"-waiting for a piece of news or for the next trading alert to hit-becomes prohibitively expensive. Packet-switched technologies, such as BellSouth's Mobitex, carry individually addressed packets of data, and can operate over shared lines. This enables the carrier to charge only for the data transmission time actually used. In fact, most carriers charge a flat ($20-$60/month) fee based on likely use. This contrasts with rates for older paging technologies that can reach $1000+/month for equivalent usage.
This technology allows the RIM pager, operating on BellSouth's nationwide paging network, to provide the high speed access (less than 10 seconds per transmission), low latency, and encryption capability necessary for fast, secure financial transactions.
Financial services using this new technology are available at several levels of sophistication.
BellSouth includes the RIM950 in several wireless communications packages. The pager is $359 and the connect fees vary with use from $24.95 to $59.95/month. The pager can also be rented for $20 to $25/month, depending on the package. Areas covered include most major cities. A coverage map is available at www.bellsouth/wd/covapp/.
A more financially oriented package is offered by Go-America, which resells the RIM 950 as a universal e-mail and data retrieval device. In addition to e-mail, news, sports, and travel information, an extensive financial section offers information from Bloomberg, Data Broadcasting, Motley Fool, Quote.com. A user simply scrolls to a category of interest, clicks on a topic or headline, and the underlying material is sent to the pager. In my tests, the process was quite fast; incoming stories arrived within 10 to 20 seconds. Access to selected Internet data, under the name Go.Web, is currently being added to the service.
Go-America prices range from $9.95/month for modest e-mail and Web use, to a flat $59.95/month for operator assisted paging and unlimited e-mail use and Web access. The pager is priced at $359-$259 with a one-year services contract.
For Fidelity Investments, the RIM950 is primarily a trading vehicle. Fidelity's "Instant Broker" service enables its customers to access their accounts, get real-time quotes, set alerts, and make trades using the 950. With a turnaround time of four to 10 seconds per transmission, Fidelity estimates an entire transaction can take as little as 30 seconds. Instant Broker was initially offered only active traders, defined as those making at least 36 trades per year and having accounts valued over $100,000. However, demand for the service from other clients recently caused Fidelity to drop the 36-trade criteria. Through Fidelity, the RIM950 costs $359 (or rents for $23.95/month including loss insurance) plus $49.95/month for the full BellSouth e-mail service is ($55/month with voice-to-pager operator assistance and text-to-synthesized speech capability). News feeds, weather reports and sports will be added into this base package this summer with some special services priced additionally. Fidelity wants its service to be device independent, but like other providers it has found that it can supply only subsets of Instant Broker on other devices. The full service, including real-time data and order execution, requires the RIM950.
Given the pager's diminutive size, it is surprising how quickly one adapts to poking out messages. Several innovative features make this possible. A thumb-operated roller wheel acts as a mouse substitute; roll it up or down to highlight a menu item, press down on the wheel to select. Use of the small keypad is aided by several software features. Built-in algorithms recognize appropriate text for a given entry, such as an @ or a "dot" in e-mail addresses: press the space bar and it automatically inserts them. Hold down a key just a little longer than normal and it is capitalized. The user configurable Auto Text feature inserts full text for abbreviations, so the user can create a library of commonly used expression- e.g. typing "hwr" to automatically insert "Hold for when I return."
While giants like Fidelity can implement their own wireless trading systems, smaller brokerages can offer wireless access to their customers through third-party providers such as w-Trade. w-Trade Tech-nologies, a spin-off of financial software maker UNIF/X, acts as a wireless middle-man for customer orders, queries, and alerts. w-Trade routes data between a customers pager, handheld PC, or smartphone, and the online trading site of their broker. The cost of the w-Trade service is simply added to the customers monthly brokerage statement.
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