The waiting may soon be over: Congress in June approved legislation that will allow many legal agreements, including brokerage applications, to be completed online and authorized with a "digital signature" rather than ink on paper. President Clinton signed the bill Friday and it will take effect in October.

A digital signature isn't a signature at all in the traditional sense: It is merely an electronic guarantee that you are who you claim to be when doing business on the Net. While making such an assurance in the online realm - where much is often cloaked in anonymity - may seem daunting, technologies already exist to handle the process.

Here's how it works: Some personal information would be collected when you identify yourself in an online agreement. That information would be compared with records available from another party, such as one that verifies credit-card transactions or maintains consumer credit histories. If the information checks out, your online identity - your signature - is confirmed.

But the process still raises many questions among investors. Here are a few:

Q: What is the big advantage to using a digital signature?
A: Speed. Investors using digital-signature technology can choose a broker, complete an account agreement and make a trade - all in minutes. It will make buying a stock more like buying a book from an online retailer. "They will now be able to conduct business in real time," says Michael Hogan, general counsel of DLJdirect, the Jersey City, N.J., online arm of Donaldson Lufkin & Jenrette.

Aside from dodging paperwork, a quick sign-up could be useful, for example, when your regular online brokerage firm is having technical problems. If you need to make a trade and your firm can't help you, you'll be able to find another firm.

At most online brokerage firms, of course, you'll still also need to deposit money into your new account before you make a trade.

Securities laws prohibit investors from using a credit card to buy stocks. But transferring funds out of a bank account and into a brokerage account also is expected to become easier with digital signatures.

Q: Will I have to use a digital signature even if I prefer paper?
A: No. Brokerage firms will assume that clients prefer paper unless they opt to go digital. But online firms believe a large percentage of their customers to opt in.

"We know that our customers lean toward doing things electronically when they're given the option," says a spokesman for Datek Online of Iselin, N.J. The digital-signatures legislation also is expected to increase the use of electronic record-keeping and online account statements, which could make life easier at tax time, for instance. But, again, you can choose to stick with paper.

Q: Could someone steal my identity and rack up big losses in an account opened under my name?
A: Analysts don't see any reason for concern. DLJdirect, for instance, has allowed customers to sign up with a type of digital signature for roughly five years, Mr. Hogan says, and it has encountered only one incident. A group of people were caught using accounts created with information stolen from people's trash cans. He says the firm is comfortable that it can quickly surface attempts at fraud.

James Lucier, an analyst at Prudential Securities in Washington, says verification procedures in the digital-signatures process should speed up fraud detection.

"If done through the mail, fraud may be detected, but it could take weeks," during which the thief would be free to conduct bad transactions, Mr. Lucier says. "But [with a digital signature] you have instantaneous detection of fraud."

It isn't clear who would be legally responsible for fraudulent transactions if the scam artist isn't caught or can't be held accountable, Mr. Hogan says. The brokerage firm could be liable if it didn't act responsibly, or the client could be if he or she was reckless with personal data that allowed the fraud to take place, he says.

"That is one of the shortcomings of the legislation. It doesn't address the liability question directly," says Frank Torres, legislative counsel for Consumers Union, a nonprofit group in Washington, D.C.

But he says existing consumer-protection laws from the off-line world will apply. He notes that it will be in the best interest of firms to make clients comfortable with the new technology.

Q: What other financial services will be affected by the digital-signatures law?
A: Just about every element of personal finance that can be done online may be altered in some way. Buying insurance, arranging a loan and buying or selling a home - all of which involve a lot of paperwork - could be streamlined, says James Punishill, an analyst at Forrester Research in Cambridge, Mass. Obtaining a car-insurance policy on the Net, Mr. Punishill says, could become a one-day process: Place an order in the morning and be insured by that evening.

-- (The Wall Street Journal)