Consolidation among Hong Kong's struggling online brokers is expected to accelerate after 2Cube Securities announced it was ending operations. The online securities joint venture between Pacific Century CyberWorks and JPMorgan Chase announced its closure yesterday, selling its subscriber base to rival E*Trade Hong Kong. The scrambling among online brokers for clients would intensify with SHK Online expected to launch an aggressive marketing campaign to attract the former 2Cube accounts sold to E*Trade. E*Trade's Asia Pacific vice-president John Lord turned up the heat in the online securities sector even further yesterday by announcing the 2Cube deal was just the beginning of a string of acquisitions planned in Hong Kong. 'We've got US$550 million in free cash at the group level. In the future, we will be looking at any deal which is a credit to our earnings,' Mr Lord said. But the United States-based Internet broker refused to disclose how much it had paid to acquire all of the nearly 8,000 online accounts from 2Cube. Industry insiders, however, estimated E*Trade had paid between HK$1,000 and HK$2,000 for each account. Launched in Hong Kong only a year ago, 2Cube said its operations would cease on January 14 and it blamed the closure on adverse market conditions. Of the accounts transferred to E*Trade overnight, only 4,600 were considered active - having made at least one trade in the past six months or a cash balance. Kit Yau, an online financial services research manager at International Data Corp, said the E*Trade deal would unleash fierce consolidation among online brokers in Hong Kong. 'I think Hong Kong is likely to repeat what has happened in Singapore, where we saw the number of brokers sharply decrease since the country scrapped its commission rule in October last year,' Ms Yau said. The penetration rate of online trading in Hong Kong is estimated to be between 5 per cent and 10 per cent. Most analysts agree the penetration level is only sufficient to sustain a handful of online brokers. Although E*Trade secured rights to 2Cubes' accounts, keeping those accounts active will be difficult. E*Trade has already announced the account holders would be given a one-month commission-free trading period. They could also choose commission schemes at either 0.18 per cent, which 2Cube formerly charged them, or the flat fee of HK$130 per trade E*Trade currently charges. Given those special offers, Mr Lord anticipated 'a 100 per cent transition success'. The hope, however, could be dashed by rival SHK Online. Douglas Chen Wai-huen, SHK Online's chief executive officer, said yesterday the firm would launch an advertising campaign encouraging former 2Cube account holders to switch brokers. 'What we are targeting is the business opportunity, not E*Trade,' Mr Chen said. 'We believe we can better serve those clients than E*Trade, because we have better knowledge.'