TradeCast, a Houston, Texas-based online brokerage firm, announced Wednesday that it has received a $40 million (US$) investment from two Texas billionaires. The bankroll is expected to drive the company’s attempt to become the Internet’s dominant brokerage destination.
For their $40 million, brothers Sid and Lee Bass received a 40 percent stake. The tandem apparently views the online brokerage business as something hotter than an August day in downtown Houston.
In a statement Wednesday, company president Bobby Earthman claimed that TradeCast’s proprietary technology — which allows for trades to be completed “in a matter of seconds” — will separate it from the online investing pack and allow it to offer professional-level tools to consumers.
“We will leapfrog the competition like E*Trade and Charles Schwab by offering easy-to-use, reliable stock trading solutions,” said Earthman. He added that “our ability to attract investors like the Basses is a testament to the quality of our product and service.”
From Software to Consumer Fare
TradeCast started as a software development company in 1996, creating products for online trading. The company claims to have developed the first Windows-based trading software that allows investors to go directly to the stock exchange.
The company has sold its software packages to 100 broker/dealers nationwide, and some 35,000 stock trades a day are completed on it. It is also in the process of developing programs that will provide investors with access to major foreign stock markets.
Despite the enthusiasm, observers note that TradeCast is aiming high. E*Trade, for example, completes over 80,000 transactions in a single day, far more than the 35,000 completed by brokers using TradeCast software.
The company charges a $19.95 fee for every trade completed. While it acknowledges that the fee is at least $10 more per trade than some other online brokers, TradeCast says that its trades are completed in seconds, while consumers have to wait for other brokers to order. The time difference can affect the cost of the stock and significantly alter the bottom line, the company says.
TradeCast also offers a $280 a month professional version of its Go Direct program, which includes real-time quotes and charts used by professional traders.