When they're out visiting clients or attending shows, Wall Street portfolio managers have tended to place trades the old-fashioned way. "If you go to a buy-side conference, you see the portfolio managers constantly checking their BlackBerrys, and at every break they're calling back to the trading desk to submit orders and allocations through E-mail," says Adam Honoré, senior analyst at Aite Group.

"That creates risk issues because there's often a communication gap between the desk and the portfolio manager," and that gap can cause serious trade losses, Honoré continues. A typical E-mail might take the trading desk 20 minutes to acknowledge and address. "Twenty minutes is a long time when you're dealing with large volumes of buys and sells," he says.

To mitigate this risk, portfolio managers are starting to turn to wireless trading on BlackBerry or Windows Mobile devices. According to Honoré, at least one firm conducted a price analysis for wireless portfolio management software. "They figured that if they could prevent one trade loss of decent size, that would pay for the software," he explains. The firm adopted a wireless application, and risk managers subsequently prohibited the submission of orders via E-mail, cutting trade losses through E-mail to zero. The wireless application also provides an audit trail and some enforcement of compliance rules, Honoré notes.

On the other hand, letting people trade wirelessly can raise data security issues and the potential for error on transactions executed on handheld devices. Authentication and encryption are important to protect any device that provides access to sensitive data. Research in Motion (Waterloo, Ontario) provides both on its BlackBerry Enterprise Server, and an entire industry has sprung up around network protection.

The other issue is the possibility of making trading mistakes on a tiny handheld screen. "I've known a few people who've made significant mistakes using their wireless device," says Ray Wagner, research vice president at Gartner. One person using his Palm during a meeting decided to order $100,000 worth of stock, according to Wagner. Later, he realized he had ordered 100,000 shares of the stock, which tanked the next day.

Still, "The fact of the matter is that we're going to go in this direction -- people yell and scream too much about convenience, and eventually they get what they want or they go around you if you try to block them," Wagner says. "We have to move in this direction, and it's a challenge for the security experts and the user-interface designers. It's not something that can't be controlled, at least to the extent that we control our corporate network and desktop computers -- there's nothing inherently different about a handheld device than there is about a laptop device or wired desktop."

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