CyBerCorp.com, the Austin, Texas-based online broker, plans to launch direct electronic access for options trading using the same Internet-based order routing technology it offers stock traders to reach ECNs. According to Philip Berber, founder and CEO, CyberCorp.com will provide investors with direct access to the Retail Automatic Execution System, known as RAES, at the Chicago Board Options Exchange and will probably send the orders through ABN Amro, a member firm, as the executing broker. Over 26% of public customer orders are executed on RAES, according to the CBOE's Web site.
However, in a move to court the active trader, other online brokers, including Charles Schwab, Fidelity and E*Trade, as well as options specialists like Mr. Stock and Wall Street Access, recently have added options functionality to their sites, while Datek Online plans to.
Refuting that CyberCorp added the options execution functionality in response to these firms, a spokesman says that the capability has been in development for the past six to eight months. The vision of the company was to expand past stocks, he says.
In CyBerCorp's case, the options trading functionality is being launched with the release of CyberTrader 2.0, a sophisticated Internet-based front end, which allows active traders and investors to route orders to major ECNs such as Island, Archipelago as well as Nasdaq market makers, and Nasdaq SOES and SelectNet systems. CyberTrader 2.0, which is in beta, includes an array of new functionality such as real time streaming quotation data, portfolio tracking and direct access to the RAES system. "It allows any and all users to funnel orders into a single pool of liquidity," says Berber, referring to CyberXchange, the company's ECN portal.
Launched in June, CyBerXchange has the ability to hunt and seek for the best price among market makers, SelectNet or multiple ECNs. Up until now, active traders had to use CyberX, a lighter front-end, to get into CyBerXchange, but the new release of CyberTrader, also contains a link to the so-called SuperECN.
Berber claims it has "sucked in a lot of volume from Schwab Velocity, E*Trade and Fidelity. They get frustrated by how long it takes to execute and get confirmed," he says.
Because active traders were pumping volume into the ECN portal, says Berber, CyberCorp.com was able to break into the top ten of online brokers rankings in the third quarter of 1999 based on two industry reports. CyberCorp ranked ninth according to a U.S. Bancorp Piper Jaffray survey, with 9,231 average daily online trades, increasing 67%, when the rest of the industry's trading volume slid 7.8%. Hambrecht & Quist ranked CyBerBroker tenth with 9,200 trades, as compared to 5,300 the prior quarter, when it ranked twelfth. The stock-only rankings exclude online mutual fund, option and fixed-income trades.
Stock trading, however, is the tip of iceberg for Berber who is working toward building a global electronic trading platform that matches buy and sell orders, at the market, in one or two seconds as compared with the New York Stock Exchange, where the expectation is 22 seconds.
"Our view is this is much more than stock trading, it's much more of an electronic securities operating system or E-SOS. That is a global 24-hour a day platform through which buyers and sellers can be matched." Berber calls this a virtual exchange, where buyers and sellers have their orders matched in Nasdaq and the NYSE and in ECNs.
In the future, Berber says, his decision is whether to expand into fixed income or futures next. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio