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WebStreet Securities didn't get its start in New York or Silicon Valley. Instead, in late 1996, brothers Joe and Avi Fox, both in their early 30s, built the online-brokerage company in Northbrook, Ill., outside of Chicago. That was definitely a smart move, as online trading exploded over the next couple of years. From 1996 to 1998, online accounts increased from 1.5 million to 5 million, according to Forrester Research.

About 15 million people do financial research online, but many of these people will find themselves using online-brokerage services. According to Forrester, by 2002, online accounts are projected to reach 14 million. A striking example of the growth is at Charles Schwab. It took the firm 15 years to attain 1 million accounts. Then, from 1996 to 1998, Schwab grew its online account base by more than 1 million.

A variety of factors account for the growth. First, the price is right. Why pay a $250 commission when you can pay $15 or less? Second, brokerages offer a tremendous amount of information resources -- real-time quotes, news feeds, commentary, and financial-planning calculators -- which help make investing much easier. Third, online trading is convenient. You can trade from your home at any time, without talking to a broker. Finally, online trading is empowering. You can take control of your own financial decisions. WebStreet was somewhat late in entering the online-brokerage industry, but that turned out to be an advantage because it let the company build its system from the ground up. "As for our competitors," said Jonathan Rosenberg, senior vice president, "they had to build around their existing legacy systems, which involved direct communications through modems. Our system, on the other hand, is built solely for the Internet."

As a result, the infrastructure of WebStreet Securities is easily scalable. In fact, during the recent downturn in the market, the firm was able to effectively handle the surge in trading volume. Another advantage of the WebStreet Securities technology is speed. It has perhaps the fastest execution speed in the industry. Within about 6 seconds to 10 seconds, each trade is filled. Further, when this occurs, a pop-up box appears immediately on the screen with details of the trade.

WebStreet Securities also has a mock-portfolio feature. For free, users can create their own portfolio to track performance. This is done with watch lists (each person is allowed up to 10) that use Java technology to continuously update the portfolios with real-time quotes.

"It's kind of like having a Quotron machine on your desktop," said Rosenberg, "which is what your traditional broker has." According to WebStreet, 90 percent of those who create mock portfolios eventually become customers.

WebStreet also has a trading pit, where users find all the information they need on a single screen. This puts all the information you need on a single screen. They can monitor investments -- stocks, options, and even mutual funds -- as well as execute trades. All in real-time. The company is not completely virtual, however. If a customer needs to talk to a broker, toll-free assistance is available 24 hours a day, seven days a week. Of course, this service has a price. The commission rate is $14.95. "other firms may have commissions below $10," said Rosenberg, "but you cannot call a human broker at these firms. You can only communicate via e-mail. Once the commission rate goes below $10, there is a definite reduction in customer service. It's an inevitable trade-off."

For WebStreet Securities customers, there is no commission for all Nasdaq trades of 1,000 shares or more, as long as the price of the stock is $2 or higher. "Other firms have such a policy," said Rosenberg. "However, ours does not have hidden fees, such as shipping and handling fees. Also, we allow both market and limit orders."

Capital funding for WebStreet Securities has come from company executives, as well as family and friends. The company started with just five employees and now has more than 100. WebStreet Securities hopes to branch out from stock trading. "We plan on being a full-service financial institution," said Rosenberg. "This means offering banking, insurance, IPOs, etc."

With the general malaise in the IPO market, it doesn't look like there will be any brokerage IPOs this year. But as long as WebStreet Securities maintains its innovation and growth, it should be a good prospect for an IPO next year.

Commercial: Readers interested in IPOs may want to check out The Investor's Guide To New Issues: How To Profit From Initial Public Offerings, available in our bookstore.