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Morgan Stanley to Buy E-Trade for $13B

nytimes.com

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Re: Morgan Stanley to Buy E-Trade for $13B

#61

Post by elliekelly »

bb123 wrote: post #48
petilon wrote: post #21

If you're considering using E-Trade you may want to consider that E-Trade does not take responsibility if they are hacked. They group cybersecurity events and software malfunction under "Force Majeure" events ("acts of God"). That means if your retirement savings vanish because they are hacked you're out of luck. See https://content.etrade.com/etrade/estation/pdf/10118customer... Fidelity and Vanguard don't have such…

How can this be legal? Surely they have a duty of care to their customers.

It's an interesting and unsettled area of the law. It gets even more interesting when the perpetrator behind the cybersecurity incident is a state because, some have argued, it constitutes an "act of war" which has long been considered covered by a force majeure. Though FWIW I think eTrade's stance is here is very aggressive and I'm surprised it hasn't caught the attention of regulators yet. If financial institutions can be allowed to disclaim any and all responsibility for cybersecurity then our whole system will be in serious trouble.

Re: Morgan Stanley to Buy E-Trade for $13B

#62

Post by murph-almighty »

basch wrote: post #19
omarhaneef wrote: post #10

I rely on Matt Levine to explain, more clearly than I could, how brokerages make money ("The Trades Will Be Free Now"): https://www.bloomberg.com/opinion/articles/2019-10-02/the-tr... Let me highlight a key passage: "Even this understates the change, because the actual way that stock brokers work today is that you keep some cash in your brokerage account to fund potential trades, and the broker earns interest on that…

this is a good explanation too, and from a local. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... The writing was on the wall for E-Trade. Banking is in an ebb of consolidation. E-Trade and TD Ameritrade had to sell once Interactive Brokers / Schwab started that game of dropping commission. They didnt add enough other value besides stock trading. They are a component to a larger banking suite. I have…

>I am somewhat surprised nobody offers an abstracted savings account, that handles 401k, IRA, HSA, paying rent and bills, and access to credit.

I think it'd be complicated to regulate from a risk perspective. Checking and savings accounts get insured by the FDIC, how do you insure a large pile of money invested practically everywhere in varying risky scenarios? You'd need to at least create a boundary between "FDIC-insured low interest funds" and "your results may vary but will probably be fine" funds.

Re: Morgan Stanley to Buy E-Trade for $13B

#63

Post by hedora »

hcknwscommenter wrote: post #43
frockington1 wrote: post #17

Earlier quoted context omitted.

Robinhood has terrible order execution. I switched to TDA after getting sick of limit orders executing nowhere near my limit price. Market orders were abysmal as well

" limit orders executing nowhere near my limit price" How is that possible/legal?

Maybe they were stop orders?

Stop orders execute a market trade when the price hits a limit.

So, there’s a heuristic around when “the market price hits the limit”.

If you execute too late, it might not execute at all. Too close to the limit, and it might cross back over. Also, stop orders are usually done to limit losses, so adding delay increases exposure to loss.

https://www.diffen.com/difference/Limit_Order_vs_Stop_Order

Limit orders typically have higher commissions. Maybe stop orders were being confusingly marketed as limit orders?

Re: Morgan Stanley to Buy E-Trade for $13B

#64

Post by anthonypasq »

OJFord wrote: post #25

$13B is a more than 96% discount on the stated $360B asset value, what am I missing? Unless it means (or is including) assets held for clients in nominee accounts?

if you counted Assets under Management, Blackrock would have a valuation of 7 trillion. That clearly isnt the case.

They dont actually own the assets

Re: Morgan Stanley to Buy E-Trade for $13B

#65

Post by icedchai »

petilon wrote: post #21

If you're considering using E-Trade you may want to consider that E-Trade does not take responsibility if they are hacked. They group cybersecurity events and software malfunction under "Force Majeure" events ("acts of God"). That means if your retirement savings vanish because they are hacked you're out of luck. See https://content.etrade.com/etrade/estation/pdf/10118customer... Fidelity and Vanguard don't have such…

It says: "Force Majeure Event" shall mean any act beyond E*TRADE’s control.

I'm sure you could pay a lawyer enough to argue that their own site security is under their control.

Re: Morgan Stanley to Buy E-Trade for $13B

#66

Post by ghaff »

eropple wrote: post #56
cactus2093 wrote: post #34

Earlier quoted context omitted.

Huh, so the friction for you is the actual swipe or chip read? To me the benefit of Apple Pay is not bringing your wallet everywhere, or not taking it out if you already have your phone in your hand.

I use a phone case that holds my cards, so I've got my cards with me already. For me it's how much faster Apple Pay is. Also works way better when I travel out of the U.S., because U.S. cards overseas end up being chip-and-sig, they have to go find a pen, etcetera etcetera. Tap phone, done. I also like the integration that the Apple Card has with Apple Wallet. I'm not all-in on Apple, I don't own a Mac anymore, but t…

Using my Apple Watch when traveling in Europe is very convenient because of the sig thing. Unfortunately, the max transaction is often pretty limited.

Re: Morgan Stanley to Buy E-Trade for $13B

#67

Post by rwmj »

lordnacho wrote: post #50
hcknwscommenter wrote: post #41

Earlier quoted context omitted.

The entity selling the order flow is not front-running, but the entity buying the order flow (market maker, HF trading firm) is basically front-running. It's just that the front running is done in a way to actually lower prices or increase liquidity for the underlying trades in the order flow being sold.

No it isn't. I've worked at an HFT, this is not why they buy the order flow. Retail order flow is worth buying because it's what's called "non-toxic". That means the retail traders generally don't know which way the market is going, ie they are either wrong or too small to make the market move against the market maker. Contrast that to trading against a hedge fund which might have a better clue and is potentially lar…

I'm confused how this is valuable. If the retail traders are wrong, then why do you want that information?

Re: Morgan Stanley to Buy E-Trade for $13B

#68

Post by basch »

murph-almighty wrote: post #62
basch wrote: post #19

Earlier quoted context omitted.

this is a good explanation too, and from a local. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone... The writing was on the wall for E-Trade. Banking is in an ebb of consolidation. E-Trade and TD Ameritrade had to sell once Interactive Brokers / Schwab started that game of dropping commission. They didnt add enough other value besides stock trading. They are a component to a larger banking suite. I have…

>I am somewhat surprised nobody offers an abstracted savings account, that handles 401k, IRA, HSA, paying rent and bills, and access to credit. I think it'd be complicated to regulate from a risk perspective. Checking and savings accounts get insured by the FDIC, how do you insure a large pile of money invested practically everywhere in varying risky scenarios? You'd need to at least create a boundary between "FDIC-i…

that would still exist, you just wouldnt see it from the UI/dashboard that you interact with day to day. There would be risk parameters, not dissimilar to the "find your risk tolerance" type wizards today.

the important part being to eliminate too many choices. the more choices people have, the more chances they choose a suboptimal one or panic and choose nothing. (paradox of choice.)

Re: Morgan Stanley to Buy E-Trade for $13B

#70

Post by logicchains »

pas wrote: post #59
MR4D wrote: post #47

Earlier quoted context omitted.

With the dollar getting so strong and since we are now post brexit, I expect capital flight. The people running the show have zero understanding of how banking works. And no, I’m not being arrogant - negative rates destroy capital, which is not what you want in a bank. If you look at the largest European banks, they are all very weak (due to many factors, not just this one). However, negative rates is making them wea…

What would be the solution for this? Which actors/groups ought to do what? Could you explain this a bit? Thanks!

The central bank could start raising rates. There are very good arguments for temporarily lowering rates to stimulate the economy, but the arguments for keeping it this way for 5-10 years are weaker. Especially if it discourages savings, as in the long term economic growth requires savings (in the economic sense, wherein there is a choice to "save" or "consume" our output, and only the "saved" output can be invested to increase future productivity).

There is also little empirical evidence that such low rates help (or no evidence, because negative rates were never tried before). Japan's had low rates for a while and they didn't seem to help, but the argument could be made that without those low rates the situation would be even worse (you could find economists who'd argue both sides). Personally I think it's better to err on the side of favouring whatever the "market rate" of interest would be (the rate if the central bank was taking no action to alter the supply of money or loans), and I'm very doubtful that would be negative.

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