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The Izone cost-savings strategy
TD AMERITRADE Izone is an offering designed specifically for
self-directed investors experienced in trading through online discount brokerages.
To participate in TD AMERITRADE Izone, clients must self-qualify based on
the guidelines outlined below.
For these experienced clients, we offer the quality and responsiveness of
the TD AMERITRADE online trading platform with lower commissions. We can do
this because we limit the costs of operating TD AMERITRADE Izone. Costs not
necessary for executing stock trades have been eliminated—like those
associated with non-electronic Client Services and check deposits. You have
the ability to subscribe to additional tools on the site if you want them.
These cost savings are passed on to you in the form of a deep discount brokerage
commission. All accounts must be approved for margin—cash accounts are
not available. Of course, you don’t have to use margin. If you wouldn’t be
happy or comfortable with this type of operation, then TD AMERITRADE Izone
is not for you. If you might be, keep reading to find out more about what
makes TD AMERITRADE Izone one of the most exciting online trading experiences
on the market.
Automation
We’ve reduced costs by using automation. We don’t staff for manual processes.
For example, checks require a manual process of opening the mail, recording
the check, photocopying the check, and then posting the funds to the account.
So, we do not accept checks. We use only electronic means such as electronic
deposits and withdrawals (ACH - Automated Clearing House), bank wires or
brokerage transfers. You create the deposit or withdrawal slip online and
the request is reviewed and processed automatically. By the way, we don’t
charge for incoming bank wires or electronic transactions.
Risk
The second way we’ve reduced costs is by controlling our risk through emphasizing
the self-management of your account. Our system monitors each order, and
equity buy orders will only be accepted if buying power is available in
the account. Sell orders will only be accepted for stocks that are long
in the account or designated “short” in a short account with the
proper margin requirement satisfied. Options orders will only be processed
if the account has been granted a sufficient level of options approval and
the appropriate margin requirement is satisfied. Then you assume the risk
of the order to the market. TD AMERITRADE Izone does not adjust executions
as all orders are sent to the market and none are executed in-house. If
need be, we will represent your interest to the market.
Internet
A third key criterion for this model is use of the Internet. You place
trades either through the Internet or Interactive Voice Response (IVR)
telephone system for the lowest commission. You can access a broker but
will pay a higher commission on those trades. All Client Services are through
e-mail. Clients cannot reach a TD AMERITRADE Izone Client Services representative
by telephone. E-mails for Client Services will be responded to quickly
during company hours, and confirmation of trades will be reported promptly.
Daily trade confirmations and monthly statements are posted to your online
account and you’ll receive an e-mail notice when they’re available. So if
this model is for you, you win again as there have been no expenses built
in to the commission for staffing for manual processes, phones or mail.
In addition, TD AMERITRADE, Inc. does not make a market in any stock. All
orders are routed to the market for execution. We do not batch orders or
send orders to the market in windows. We report every phase of the order routing
to you. A time stamp of the order receipt, the time the order was sent
to the market, and the time the order was reported back as executed will be
shown to you on the order status screen.
However, reducing risk and costs alone is not the sole purpose of this model.
We realize we must offer you a great value. And TD AMERITRADE Izone does that
with a rich Web experience along with deep discount commissions.
To summarize:
You receive:
- $5 online and IVR stock orders (includes market, limit, stop,
short sells, odd-lot and OTCBB orders)
- Extended-Hours Trading for $5
- Regular Market + Extended-Hours in one order for $5
- No maintenance fee
- No per-share charge
- Short sells in extended hours
- Online and IVR options commission at $5 + $0.75 per contract
- Complex options tickets
- Mutual fund orders for $17.99
- Real-time processing
- Wireless trading
- Access to a broker at a higher commission
In exchange for these Izone attributes:
- You manage your account and assume your own risk
- All service communication is via e-mail
- Initial account funding is by ACH (Automated Clearing House),
bank wire or brokerage transfer
- You maintain an account value of at least $5,000
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