Sagamore Trading Group Inc., a Roslyn, N.Y., broker-dealer, wants to do battle with the on-line behemoth E-Trade Group.
Like Palo Alto, Calif.-based E-Trade, Sagamore plans to allow active traders to see level II Nasdaq real-time quotes on-line. Level II quotes let investors see all the bid, ask, and match prices being offered by professional market makers.
Sagamore, however, plans to add an additional layer to its service. The company will let retail investors use an electronic trading system called Island that promotes direct interaction between customers, eliminating the need to pay the market maker's bid/ask spread, which can push up the stock price.
The majority of on-line brokers, including E-Trade, also direct order flow through a number of Nasdaq marketing firms, said Andrew Gottfried, a Sagamore vice president. Mr. Gottfried said that Sagamore's proposal will truly level the playing field between institutional and retail investors. Most Internet brokers allow customers to see only level I Nasdaq quotes, which show just the best bid or ask price.
Sagamore's new service, to be offered by a new subsidiary called Time2Trade.com Inc., will launch on April 12. It will be available to new clients who average 30 or more transactions a month. For the first month, Sagamore will charge new clients a flat fee of $14.99 for Nasdaq trades of up to 1,000 shares. The usual rate is $17.99.
Internet brokers have rushed to provide bells and whistles to their active retail traders to prevent them from defecting to other firms. This week Discover Brokerage, a unit of Morgan Stanley Dean Witter & Co., announced plans to offer handheld wireless technology to customers, something Fidelity Investments unveiled this year.
Sagamore's new service might put it ahead of the competition temporarily, said Christopher Musto, a senior analyst with Gomez Advisors, of Concord, Mass.
But, he said, "other brokers have their eyes on that."
For example, E-Trade could offer something similar through its partnership with Goldman, Sachs & Co. as an investor in Archipelago, an electronic trading system, Mr. Musto said.