Electronic Traders Association Adopts Statement of Ethical Principles for Member Firms.

HOUSTON--(BUSINESS WIRE)--July 29, 1999--

The Board of Governors of the Electronic Traders Association (ETA) today announced that the Board had unanimously adopted a Statement of Ethical Principles to be used by all ETA member firms.

While day trading offers individuals significant opportunities, it also can expose traders to potential losses. Moreover, recent actions by some members of the state securities regulatory community have highlighted potential problems within some day trading firms that warrant close attention.

The Electronic Traders Association believes that because changes in technology and market structure rules now allow individuals direct access to the securities markets, without the assistance of intermediaries or professional advice, it is more important than ever for day trading firms to observe high standards of ethical conduct.

"ETA member firms have been at the forefront of promoting responsible regulation and fair practices," said ETA president James H. Lee. "We believe that both our adoption and adherence to this Statement of Ethical Principles are significant steps that will further promote investor protection."

ETA member firms commit substantial capital investments in each trader that undertakes a day trading relationship. ETA member firms seek long-term relationships that will be successful for both the individual traders and the firms. For these reasons, ETA member firms offer extensive education programs and discourage individuals from participating in day trading that the firms feel do not have the potential to become successful.

"We feel that day trading firms, as well as the on-line brokerages that encourage active trading, have an ethical obligation to be frank in their communications with customers and to provide a balanced perspective regarding the benefits and risks of day trading," Lee said.

In February of this year, ETA adopted a set of Risk Disclosure guidelines, which are provided to each potential trader of an ETA member, and which serve as the model for a similar set of guidelines that are being considered by the NASD Board at this time.

Electronic day trading offers the right customers a tremendous opportunity to enter a very satisfying and potentially profitable career. Moreover, active day trading promotes price competition that has increased the efficiency of the securities markets and has yielded indirect benefits for broader retail customers and institutions alike.

"The ETA Statement of Ethical Principles reflects the values of the firms that form our Association, and represents our commitment to raise the standards in this growing industry," Lee said. "While not all day trading firms are members of the ETA, we feel strongly that it is important at this time to establish a hallmark of responsible self regulation in the day trading community."

The complete text of the ETA Statement of Principles reads as follows:

ELECTRONIC TRADERS ASSOCIATION

STATEMENT OF ETHICAL PRINCIPLES

Electronic Traders Association (ETA) is an association of broker-dealers that provide individuals, who day trade, with technology at a level generally available to institutions and securities dealers. ETA seeks to encourage education and awareness regarding the opportunities and risks of day trading, to promote price competition in all securities markets, and to be a resource for law, guidance and regulation in these areas.

Changes in technology now allow individuals direct access to the securities markets without the assistance of intermediaries or professional advice. These changes require day trading firms to meet high standards of ethical business conduct. As ETA members we pledge to observe these principles:

I. Responsibility to Promote Reasonable Regulation in the Interests of Our Customers and the Securities Markets

We will cooperate with lawmakers and regulators to encourage appropriate regulation to protect day traders and to make securities markets more efficient.

We are dedicated to establishing and following appropriate policies and procedures to effect full compliance with the letter and spirit of the laws and regulations which govern our activities, maintaining all appropriate state and federal licenses.

II. Responsibility to the Prospective Customer

We will be truthful in all communications with prospective customers, seeking to make sure that our communications are complete in all material respects.

We will not make misleading or exaggerated claims about our services, or the benefits of day trading, and will provide a balanced perspective in our advertisements and presentations.

We will disclose fully and candidly, orally and in writing, the risks of day trading -- knowing that successful day trading requires knowledge of the securities markets, skill, and commitment. We will not obscure the reality that most people lose money in their initial trading period and that many will not ultimately become successful day traders.

We will not make false statements, provide erroneous information, or fail to inform prospective customers of the limitations, conditions or constraints of our own systems or those of our vendors.

We will be candid in our assessment of any prospective customer's skills and potential for success. We will not open accounts for customers who do not appear to have the ability to sustain losses, or intend to trade with retirement assets, or assets necessary for daily living.

III. Responsibility to Our Customers and Our Commitment to Their Success

We will be frank and honest in our communications with customers, providing to each a statement explaining the risks of day trading, including the fact that many persons will not be successful and may lose money.

We recognize that customers' skills and potential for success will vary, and therefore we pledge to be candid in our appraisal of their individual abilities as they become apparent.

We will maintain facilities to enable customers to execute transactions efficiently -- continually developing and refining systems and vendor relationships to promote customer success.

We will uphold each customer's right to privacy and confidentiality.

IV. Responsibility to Promote Best Practices

We will promote fair and open access to the securities markets and will resist discriminatory policies and practices. We will work with lawmakers and regulators to assure fair treatment of our customers and to promote efficient markets.

We will improve continually the training we offer customers and encourage them to learn.

We will treat all persons fairly, regardless of race, religion, sex, age or national origin. We will not tolerate on our premises individuals who engage in offensive behavior.

We recognize that the markets continually change and that regulatory requirements change accordingly. We will not be satisfied with ethical standards as they were but will promote principles and practices that reflect the nature of the day trading industry as it may change.

Unanimously approved by the ETA Board of Governors, July 28, 1999.

Andover Brokerage, LLC 

Mount Pleasant Brokerage Services, LP

Momentum Securities, Inc.

On-Line Investment Services, Inc.

Tradescape.Com, Inc.

The Electronic Traders Association is an association of order entry and proprietary trading firms and other vendors, affiliated companies and individuals across the United States. ETA was formed to encourage education and awareness regarding the opportunities and risks of day trading, to promote access to the NASDAQ market for all investors, to promote price competition in the NASDAQ market, and to promote investor fairness and confidence in the NASDAQ market.