So far, Internet trading has thrived because it is cheap. E*Trade led the way, offering $20 trades compared with the $60-plus charged by traditional discount brokerages such as Charles Schwab. The E*Trade was itself undercut by firms such as Ameritrade, which spent $25million in the fourth-quarter of 1997 advertising its ``eight bucks'' Internet trade. E*Trade says that many of its new customers used to be with Schwab; Schwab says that the sort of customers it once lost to E*Trade now mostly go to cheaper rivals such as Ameritrade.

Talk of $8 trades is a bit misleading, as the lowest charges apply to only the most basic transactions. Ameritrade's customers pay an average of almost $20 per trade, for example. But margins have shrunk. And the cost of winning new business has been rising for both E*Trade and Schwab, the market leader in Internet trading.

The electronic traders face a more basic challenge. The cash that Wall Street market-making firms pay brokers to send trades their way, known as ``payment for order flow'', has been a vital source of income for E*Trade and others, say Bill Burnham, an analyst with Piper Jaffray. But this is now drying up, because new rules imposed by the Securities and Exchange Commission have shrunk the profits that market makers earn onthe spread between buy and sell prices. A year ago, market makers paid brokers more than $10 a trade. Now they pay less than $3. Burnham expects such payments to dry up completely.

Asian punters rule the roost
THE Asian punters' urge to throw what is left of their money to lady luck is just one of the unpredictable consequences of the region's financial crisis, reports The Economist. The biggest surprise is that the expected boom has yet to happen, something that will delay the region's recovery. But there are a few cheerier lessons for anthropologists of economic reform.

Insurance companies in Hong Kong, for example, are reporting record results at the same time as the city's unemployment rate is rising.

Interestingly, the net profit at Malaysia's biggest lottery operator grew by more than 25 per cent over the past year, even as the country's economy hit the skids. Meanwhile, in Hong Kong, the Jockey Club, the only legal gambling outlet in the city, recorded high profits though the Hong Kongstockmarket hit a low.

Mattel shareholders reject curbs on executive pay
Mattel Inc. shareholders voted down a proposal to link top executives' pay to child labour practices at the toy makers' overseas manufacturing operations, reports Associated Press.

The proposal, sponsored by Nashville, Tennessee-based United Paper Workers International, which owns Mattel stock, was rejected by more than 95 per cent of the vote at Mattel's annual stockholders meeting in Manhattan beach.

Our position was that not only do we have certainly the most aggressive monitor plan in the toy industry, but we are the first international consumer products company to introduce independent third-party monitoring on a worldwide basis,'' said Mattel spokesman Sean Fitzgerald.

``It was our belief that the initiative was essentially redundant,'' he said.

A Union official said he was not dismayed by the vote.

It is an uphill battle to bring this to the forefront, however, this is an issue that's not going to goaway in the public's eye,'' said Frank Bragg, a project specialist who directed the proposal campaign.

The Union, which represents about 600 workers at a Mattel plant in Fort Wayne, Indiana, holds 126 shares of Mattel stock so that it can participate in shareholder meetings, he said.

The proposal called for the company to establish a policy that would reward executives for enforcing standards ensuring that Mattel and its suppliers employ no child labour.

Mattel, which has cut ties to more than a dozen overseas suppliers because of low wages and working conditions, is creating an independent panel of observers to monitor conditions in company-owned plants and those of primary contractors to ensure they do not employ workers under the age of 16, Fitzgerald said.