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Online broker DBS TD Waterhouse expects to breach the 100,000 customer base for its Hong Kong/Singapore trading platform and become profitable within two years, according to chairman Ian Struthers.

Launched in Hong Kong in January, the service has so far survived in a crowded and competitive marketplace that has already claimed such prominent victims as the world's biggest online brokerage, Charles Schwab, as well as home-grown entrant 2Cube Securities.

Both closed their Hong Kong operations, while, in March this year, Credit Suisse First Boston (CSFB) and Hutchison E-Commerce quit their online broking business and sold their joint-venture Hutchison CSFBdirect to BOCI International, the investment banking arm of the Bank of China Group.

Hong Kong's pioneering online broker, Boom.com, announced a 50 per cent staff lay-off as last year drew to a close.

With brokerage rates cut to the bone for online transactions, survival, say analysts, depends on high trading volumes generated by a large and active customer base.

But a Securities and Futures Commission survey released late last year showed only 10 per cent of the 1,000 Hong Kong respondents had traded stocks via the Internet, against figures of 40 per cent in Taiwan and the United States.

In the circumstances, HSBC, which joined forces with Merrill Lynch to bring online trading to its bank customers in Britain and Australia, has put on ice its plan to roll out the service in the rest of Asia, including its own Hong Kong back yard, where HSBC has the biggest customer base of all banks in the SAR.

But the alliance between financial brokerage house TD Waterhouse - a wholly owned subsidiary of the Toronto-Dominion Bank of Canada, which serves 3.3 million active customer accounts worldwide - and DBS, was a 'beautiful marriage' according to Kit Yau, online financial services research manager at International Data Corp.

'Online stock trading in any Asian markets is tough. Players survive on turnover which is small at the moment, and the marketplace is very crowded,' said Ms Yau.

DBS TD Waterhouse could meet its target of breaking even next year, she said, because it enjoyed strengths that other players did not have - including the reach and brand recognition of DBS in both Singapore and Hong Kong, where it had acquired Dao Heng bank.

'It could be a beautiful marriage so long as DBS can push the idea of online stock trading to its banking customers,' she said.

Other survivors in the marketplace, which was likely to see continuing consolidation, would be the online trading services offered by well established banks in the local marketplace, said Ms Yau.

Mr Struthers said the group had 45,000 customers in Hong Kong and Singapore, with the majority in Singapore, where the DBS brand and reach was stronger.

Last week, to help grow the Hong Kong customer base, the online broking partners opened a first customer service centre at Dao Heng's Ice House Street branch.

'By leveraging DBS's branch network of over 80 branches under Dao Heng Bank and DBS Kwong On Bank, we are positive and confident of expanding our business base to over 100,000 customers in the next two years,' he said.

In the United States, 85 per cent of the group's trading was now done online, but 50 per cent of all new accounts were still opened at branch networks, Mr Struthers said.

In Hong Kong, 75 per cent of trading was conducted via the call centres operated by the group, with the balance done online - though the Internet trades were now growing much faster than call centre trades.

The initiatives now introduced to expand the business included the establishment of a new customer centre and a discount offer.

With immediate effect, frequent traders could now elect to make use of a special introductory offer for trading an unlimited number of Hong Kong stocks online at a one-off commission per day of HK$388, Mr Struthers said.



DBS TD Waterhouse stays in the race