Schwab targets retail market for online fixed income

The company has enhanced its BondSource platform, allowing investors to more easily view its wide range of fixed income choices and access enhanced research and screening tools. And now investors can research and trade 22 hours a day, every day of the week.

"Investors' needs are changing," said Jim White, senior vice president of Fixed Income Trading. "We have seen online fixed income trading double over the past two years, as investors are increasingly looking for ways to reduce portfolio risk while earning an income stream in retirement."

With a daily average inventory of roughly 25,000 fixed income investment products from more than 300 suppliers - comprising one of the largest inventories at any brokerage firm - investors have a multitude of choices to suit their needs. Because of fluctuating interest rates, it is important for investors to consider both their long and short term investing strategies. The BondSource platform gives them the ability to customize their fixed income portfolio by choosing among a wide set of criteria including investment type, grade, maturity and representative yield.

"Although the market has recently favored cash and other short-term investments because of high short-term rates, both fixed income and growth investors can benefit by investing in longer-term investments now to add more stability to their portfolios," said White. "It's the story in which both the tortoise and the hare win."

Schwab added new functionality that allows investors to see all types of fixed income products on a single page. An expanded matrix lets them compare yields by maturity for all fixed income products, including a variety of CDs, US Treasuries and zero income bonds, government agencies, mortgage-back securities, hybrid preferred securities, and investment-grade corporate and municipal bonds (including credit ratings). The BondSource matrix shows 11 maturities ranging from one month to 30 years.

The unique inventory sorting logic ranks the available investment selection by the highest yield to maturity whether it is from Schwab's own inventory or not. Unlike some rate pages, the yields seen in the matrix are live and executable with a mouse click. The system sorts through thousands of line item per product and displays the highest yield at the time on the rates page. By clicking on the rate, investors are taken to the offering page where they can find details about the bond and execute the trade.