[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
raeli companies trade on U.S. exchanges in any event.
The operation will be expanded to cover trading on the Israeli Stock Exchange in the
New Year.
