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Enoch Yiu

ETrade, one of the largest online brokers in the United States, will launch Internet stock-trading services for local retail investors within four to six months.

The company is set to become the latest international broker to offer online trading in Hong Kong, following TD Waterhouse and Charles Schwab.

ETrade's purchase last year of Hong Kong exchange member TIR Holdings gave it the right to trade on the local stock market but it now provides only traditional trading services for local institutional investors.

ETrade chief brokerage officer Jarrett Lilien said it would be the right time to enter the local retail market as Hong Kong Exchanges and Clearing (HKEx) had introduced its new stock-trading system which would support straight-through Internet trading.

ETrade would offer online trading for retail investors in the next four to six months.

It might offer online services for institutional investors at the same time, he said.

HKEx last month introduced the third generation of its Automatic Order Matching and Execution System (AMS/3), which allows investors to trade stock from their personal computers or mobile phones via the Internet.

This is different from the traditional way, where investors first call the brokers by phone and the brokers' staff input trading orders manually.

'We are not too late to come to Hong Kong but I think the other online brokers have come too early,' Mr Lilien said.

'Before the launch of the AMS/3, investors could only conduct e-mail trading but not straight-through Internet trading.

'We would like to launch online trading services in Hong Kong when the market infrastructure is ready.'

Before AMS/3, some brokers received orders from investors by e-mail and then their staff input the trades manually to the stock-trading system.

ETrade now offers online trading in the US for 3.3 million retail investors.

It operates solely in cyberspace and has no branches.

'It is very expensive to operate a branch,' Mr Lilien said.

'Also, ETrade likes to break away from the traditional way of broking services to meet with the new generation of investors' needs; to facilitate them to trade in a new way.'

He believed online trading in Hong Kong could in two years become as popular as in the US market, where 40 per cent of retail trading is done through the Internet.

According to the Information Technology and Broadcasting Bureau, 70 per cent of the local population has a mobile phone while one third of local people use the Internet.

'This has provided a good foundation for the development of online stock trading in Hong Kong,' Mr Lillien said.

He said the broker's new move into the Hong Kong market formed part of its expansion plan in the international market.

The firm believed most of its future income growth would be from the non-US markets.

At present, the firm offered online stock-trading services in Australia, Britain, Canada, Denmark, France, Japan, Korea, Norway, South Africa and Sweden.

It would also like to expand into Germany and Israel next year and into China once that market was open.

'We would like to be [one of] the top one or two online brokers in every market we operate in,' he said.



ETrade to join global players in cyberspace