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E*Trade Primes for South Africa, Israel Launch

[Johannesburg, SOUTH AFRICA] Online brokerage E*TRADE appears set to defy prevailing market conditions in South Africa as it prepares for its African launch with simultaneous offerings being placed on the Israeli and South African markets.

E*TRADE Managing Director of International Deployment Steve Ferrando revealed last week that the brokerage will add South Africa to its list of active international operations during October and aims to follow this by the launch of an Israeli operation towards the end of the year. The global organization already operates in ten other countries in Scandinavia, Europe, North America, Australia, New Zealand, Korea and Japan but the South African and Israeli ventures will represent the companys first foray into the developing Middle East and Africa region.

E*TRADE has harbored South African aspirations since last year but following the collapse of a proposed Joint Venture with E-Data, the company shelved its plans. The Internet brokerage had tentatively concluded a JV agreement with E-Data subject to the South African company acquiring stock broking entity Brait Securities. The Brait Securities deal fell through however, but Brait Merchant Bank then suggested that it was willing to forge a similar alliance with E*TRADE, cutting out E-Data altogether.

As it was, E*TRADE opted to establish its own independent operation instead and press reports indicate that plans are already well advanced for the October launch. The Johannesburg Stock Exchange granted E*TRADE South Africa full membership status in August, offices have been established and the trading system has already been purchased, coincidentally enough from E-Data.

While an E*TRADE spokeswoman told an online news service last week that both Israel and South Africa were selected due to their high Internet penetration rates and established retail share ownership patterns, the South African market will present no easy pickings for the U.S. company. The two existing online brokers are flailing amidst investor suspicion of standalone Internet stock broking entities. Tradek.com failed to meet listing forecasts and U-Trade as much as admitted defeat by merging their operations with traditional stock broking entity Appleton Securities early September.

The South African E*TRADE operation under David Rothschild will differ from the existing local internet brokerage models, however, in both its fee structure and marketing investments. The flat-fee model represents an innovation for South African online traders who until now have incurred charges amounting to a percentage of the transaction amount. Additionally, the company will hope that the frenetic marketing campaign that has typically characterized E*TRADEs global launches will galvanise South African investors into accepting online trading as a more credible medium of transacting than previously, particularly so if this campaign can fire public imagination.

While the South African operation is planning an intensive marketing campaign to promote the full range of services, the Israeli enterprise will start off in a more circumspect fashion. Ferrando explained that the Israeli venture will initially be a straitened version of the complete E*TRADE service offering, providing only U.S. equities to begin with so as to facilitate as early a launch as possible. This will still be of relevance to the Israeli trading community, he explained, as about 60 percent of Is