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June 30, 1998

Nasdaq's Online Boost From Charles Schwab U.K. Business

By Staff Reports

Charles Schwab & Co., the San Francisco-based discount broker, is launching an online service this year for retail investors in the U.K. who want to trade U.S.-listed stocks.

Guy Knight, a Schwab spokesman in London, said the discount broker is enhancing its web trading service, so that U.K. investors will have the same tools residents in Asia and Latin America now have to buy and sell stocks listed in the U.S.

"We're planning to have it operational before year-end," Knight told Traders Magazine.

About three years ago, Schwab became the first broker in the U.K. to introduce trading on the web. Earlier this year, Schwab launched a domestic service for U.K. investors, which allows them to trade stocks listed on the London Stock Exchange.

Subscribers

More than 1,300 individual investors have subscribed so far to the U.K. online service, though that is merely a blip compared with the 1.7 million Schwab online accounts in the U.S., accounting for roughly $1.2 billion in assets on an annualized basis.

To be sure, the term online retail trading can be misleading. It certainly does not mean direct access to the New York Stock Exchange's SuperDOT trading mechanism, nor to Nasdaq. "The orders must first go to the broker-dealer intermediary that assumes the counterparty risk," Knight stressed.

In the U.K., online orders are first delivered to Schwab's dealer desk in Birmingham. In the U.S., Nasdaq stocks are handled by Schwab's burgeoning Mayer & Schweitzer desk in Jersey City.

For now, Schwab in the U.K. has hitched its online marketing wagon to Nasdaq, betting that its image as the home of U.S. high-technology stocks will resonate with individual investors.

"Nasdaq is heavily promoted here, and there is certainly a demand among our investor bases for its technology-heavy issues," Knight said.

Earlier this year, Nasdaq was one of the sponsors of a private investor conference hosted by Schwab in London.