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© J. W. Korth & Company, 2005.
All Right Reserved
Shop4Bonds SM is a Service Mark
of J. W. Korth & Company
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The following is an excerpt from an article about us in the Wall Street Journal.
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Bond Buyers Eye Internet Shopping As NYSE Listings Lag
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By Christine Richard of Dow Jones Newswires
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NEW YORK (Dow Jones)--While online stock trading has become a popular pastime in recent years, trading or just buying corporate bonds online never really caught on. Blame it on a perception that bonds lack the potential for easy gains that stocks offer, are more complex, less liquid and harder to price fairly in what's become mainly an over-the-counter market.
It hasn't helped matters that listings of bonds on the New York Stock Exchange, which provides real-time bids and offers, have declined sharply in recent years. Between 1994 and 2002, when debt issuance exploded, the volume of bonds listed on the Big Board dropped by half.
But James Korth, founder of brokerage J.W. Korth & Co in Miami, says he can offer independently-minded bond investors a way to search for bonds on the Internet and buy those bonds paying a straight commission rather than a less transparent mark-up.
"Until now, the secondary market for bonds had never been organized enough for investors to regularly shop there," said Korth, whose firm has been selling bonds to small investors for 22 years.
Earlier this year, Korth began offering investors $5 trades on the first 25 bonds they buy on J.W. Korth's website Shop4Bonds.com. Subsequent trades are $3 a bond on $1,000 denomination bonds. The website allows investors to peruse the inventory of more than 300 dealers, sort by credit rating, yield, industry or company and place orders for $5,000 to $5 million. J.W. Korth, which has opened more than 200 online accounts, isn't alone in offering investors access to dealer inventory on its website. But his commission structure is unusual in a market where mark-ups are common and a number of brokers act as principals on transactions with their customers, meaning they aren't just an intermediary in the transaction, but the party selling the bond. That arrangement leaves room for additional hidden mark-ups.
Exactly how much of a mark-up individual investors pay on corporate bonds in the over-the-counter market has been a longstanding concern at the Securities and Exchange Commission. The regulator is working with industry groups, including the National Association of Securities Dealers, on proposals to increase transparency to the market.
The NASD only began requiring its members to report certain trades in the over-the-counter market in 2002 and is currently expanding requirements to cover most of the market.
-By Christine Richard; Dow Jones Newswires; 201 938-2189;
christine.richard@dowjones.com
Dow Jones Newswires
04-28-04 1530ET
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