E*TRADE Bolsters Live Trading Assets

In the second merger of online trading rivals this week, E*TRADE Group Inc. Wednesday snapped up privately-held
Tradescape for $100 million in stock and bought online trading assets from A.B. Watley for another $5 million.

The price tag for Tradescape may not be rigid, as the deal stipulates that additional stock considerations may push the total value
of the deal to $280 million if Tradescape exceeds certain “aggressive” earnings targets and revenue goals for the remainder of 2002
and all of 2003.

Menlo Park, Calif.’s E*TRADE said it opened its wallet for Tradescape and the Watley technology to help bolster its offerings for
on-site and active online traders, or the ability to trade in real-time. The company’s thinking is that the purchases will enable it
to gain new customers who will use the E*TRADE Financial New York Center and the 20 current Tradescape locations.

The Tradescape acquisition includes the purchase of Momentum Securities, LLC, an onsite brokerage firm for individual professional
traders, Tradescape Securities, LLC, a direct access brokerage firm for active online traders and Tradescape Technologies’
high-speed direct access trading software, technology and network services. The acquisition does not include Market XT, which
remains a subsidiary of Tradescape Corp.

E*TRADE Chairman and Chief Executive Officer Christos M. Cotsakos said the deal well positions his firm to compete as a leading
provider of active trading services, but there is no longer any question who the largest and most dominate online broker is. That
mantle fell to Ameritrade this past Monday when it shelled out $1.29 billion in stock for Datek Online
Holdings. The acquisition pushed Ameritrade ahead of E*Trade and Charles Schwab in the online trading space.

Still, Cotsakos was pleased with the deal because it will award his firm an additional 100 transactions per day.

“By acquiring enhanced product offerings and proprietary technologies, and by significantly increasing the number of transactions
per day to over 200,000, E*TRADE Financial continues to accelerate our vision of becoming a global leader in the delivery of
innovative and integrated personalized financial services to meet the unique needs of customer households and specific market
segments,” Cotsakos said in a public statement.

The Tradescape transaction is subject to customary regulatory and closing conditions and is expected to be completed in the third
quarter of 2002.