The Internet is all about accessing information quickly when you want it, not when someone wants to give it to you. For those who like to play the stock market and fly by the seat of their pants, there is day trading. For the more reserved there is now on-line bond trading.
E-Bond, a Toronto-based company, has brought the Internet and the world of the bond market together, allowing individuals 24-hour access to a market that was traditionally difficult to participate in. The buying and selling of bonds requires going through a licensed broker. Before the Internet age, you would have to call a broker, most likely during business hours, and arrange to buy or sell your bonds. Not impossible, but hardly in tune with today’s technological world.
And to Lorne Erenberg, president and director of E-Bond, this seemed to be a bit archaic.
“I came back (from Asia) and I wanted to invest my own money. I logged on to a bank I had an account with and said that I wanted to buy bonds, and they said you have to call in,” he said. “That is a step backwards, I have an on-line agreement with you (the bank) and I have to phone in to buy bonds?”
The bank told him that was the way it worked, though it did intend to eventually introduce on-line bond trading. It never did – and E-Bond was born.
For about a decade Erenberg was a trader here in Canada. He then moved off to Asia where he worked in Singapore, Hong Kong and Tokyo. Upon returning to Canada he ran into the “sorry we can’t do that on-line” wall and decided to do something about it.
Canadian regulations still require a hardcopy application form to start an account. But after that, there is no more paper for E-Bond transactions. Once the form is filled out and approved, customers log-on and, to get money into their accounts, they can go high-tech with on-line bill payments or low-tech by dropping by with a cheque. And Erenberg doesn’t mind this either. “We like people calling in, it tells us a bit about them.”
Needless to say, security is also a big issue, as is always the case with on-line transactions. “I think people are comfortable in knowing that we are at the maximum in terms of encryption and security,” he said. When customers log on, E-Bond’s software indicates if they are not 128-bit encrypted. If not, they offer a free upgrade. Customers without 128-bit encryption cannot do business with E-Bond.
Other than the ability to access a portfolio 24 by 7, why go on-line? Price is the first advantage. You can buy bonds a little cheaper and sell a little higher, and since E-Bond is buying and selling to you, there is no wait to find a buyer or seller. E-Bond doesn’t take any commission – rather they trade from principal.
Another important aspect is service, something one doesn’t inherently think about when trading on-line. “Making someone wait in line to invest money is rude,” Erenberg said. If you have a question you can e-mail or call. One of the huge plusses of the Internet is the ability to get a wide variety of information to customers and to quickly respond to their demands. Since the bond market has no listing, it is harder to track than the stock market. Erenberg said customers have asked why a particular bond is not on their site and that E-Bond responds by making sure it is there the next day. They presently have about 100 different bond listings.
The company’s 11 employees are a mix of traders, programmers and security specialists. And they don’t cross paths. If you call with a tech question you speak to a techie, while a trading question gets you a trader.
And the future of on-line bond trading? “We feel that the Internet is going to be the only way to go in the future,” Erenberg said. Though, “you can still try and call your broker and get voice mail.”
