E*Trade Buys CyberWorks, J.P. Morgan Online Clients (Update2)
E*Trade Buys CyberWorks, J.P. Morgan Online Clients (Update2)
(Adds comment from E*Trade's Lord in third paragraph, number
of online accounts in H.K., E*Trade's H.K. staff.)
Hong Kong, Dec. 13 (Bloomberg) -- E*Trade Group Inc. said
it's buying the clients of 2Cube Securities Ltd., the online
trading business that Pacific Century CyberWorks Ltd. and J.P.
Morgan Chase & Co. set up 13 months ago.
The No. 4 Internet broker by client assets said it will buy
8,000 accounts -- 4,600 of which traded at least once in the past
six months -- for an undisclosed sum. An executive at one of the
companies said E*Trade paid about $1.4 million -- that's $300 per
active account, or 18 trades per client before it breaks even.
Competition among Internet-based securities trading firms
increased as more brokers entered the market during the past year.
The government plans to scrap minimum trading commissions in
April, increasing competition for the city's 500 brokers.
``We're taking a leadership position in a market that's
consolidating,'' said John Lord, vice president Asia-Pacific at
E*Trade Group Inc. ``There's a concern that not all brokers are
going to survive.''
Hong Kong has 115 registered online brokers -- about 20
percent of all brokers in the city -- and about one million retail
accounts. Online trading has risen to 11 percent of stock exchange
trading, from 4 percent last year.
CyberWorks and J.P. Morgan said a year ago they would invest
a combined $34 million in 2Cube. The Hong Kong-based unit, which
has 29 employees, will end operations Jan. 14, 2Cube said in a
statement. The purchase was reported earlier by the South China
Morning Post.
E*Trade, which said it has 65 employees in Hong Kong, will
allow the customers it transfers from 2Cube to pay either a flat
fee of HK$130 ($16.66) -- the same as all E*Trade customers in
Hong Kong -- or a 0.18 percent commission with a minimum of HK$88
on each trade for a period of six months.
In an effort to attract all customers to sign up, E*Trade is
also offering 2Cube customers access to J.P. Morgan research for
six months.
CyberWorks, Hong Kong's biggest phone company, has been
retreating from non-telecommunications services while J.P. Morgan
has been focusing on its institutional business.
2cube was one of 12 members of the Hong Kong Association of
Online Brokers. |
