Online trading continued to improve on its popularity accounting for 48% of all retail trades in the second half of 1999, up from 37% in the first half of the year (Table 8).The major online brokerages chalked up impressive gains in account and asset growth during first quarter. Schwab retains the number one position in total assets and trading activity, while Fidelity maintained its number one position in total number of accounts (Table 4). In February, Ameritrade.com combined with its onmoney.com unit overtook E*Trade as the busiest online brokerage site. During April, 3.4 million visitors came to Ameritrade/OnMoney, placing the brokerage in fifth place among all financial services companies . Only X.com, NextCard, Intuit, and Providian had more traffic.

Table 4

thousands of active online accounts

Sources: Piper Jaffray Inc. 4/2000, and individual companies www.ecinvestor.com , Stephen Franco is contact at Piper Jaffray, (415) 984-4646; The data represents all online trades in North America. It does not include automated telephone trades or trades placed with a human broker; historical numbers have been adjusted, as new data became available. ¹Growth in “OTHER” is primarily from MSDW and Webstreet, which have not released first quarter numbers.

Table 5

unique monthly visitors (thousands)

Source:  PC Data Online ; Gomez Advisors Spring 2000 Broker Scorecard, rank among 56 providers <gomez.com>; ¹Includes etradebank.com, telebank.com telebankonline.com ; n.r.=not rated

Table 6

millions of active online accounts and households**

Source: companies    ¹1998 total; ²April 1999; ³CAGR = 22% for accounts, 39% for households

Most analysts predict continued growth in the penetration of online investing and investment research within the population as a whole. For example, eMarketer, consolidating views from a number of financial services researchers, predicts that the penetration rate of online trading will grow from 6.2% today to 11% in 2002, and the percentage doing online investment research will grow from 28% of online users today to 38% (Table 7). In 1999, Forrester predicted that this year approximately 50% of retail equity and mutual fund trades would occur online (Table 8).

Table 7

millions of online accounts**

Source: eMarketer, eFinancial Services Report, 12/99  www.estats.com

Table 8

Percentage of Retail Orders Received Online

Source: Forrester, 1999

Onmoney.com is drawing 1.6 million unique users per month, but only 220,000 have stayed long enough to register; 40,000 of those have signed up for account aggregation from VerticalOne. In our view, the home page could use less noise and more focus.

Wells Fargo

www.wellsfargo.com

Wells Fargo brings its stage coach to the investing arena with a mid-priced online brokerage offering.

Wells Fargo (San Francisco, CA; $101 billion; 10 million ATM cards) added WellsTrade, a discount brokerage service, to its Web offerings. By Internet standards, the service is premium priced at $29.95 plus $0.03 per share after the first 1,000. But less-frequent traders likely to use a bank offering, aren’t likely to care about paying an extra $15 for a couple trades per year. Especially if the program is integrated with their bank account through online funds transfer. The company worked with Philadelphia-based BHC Securities to develop the online program.
Contacts: At Wells, Cliff Gerrish is Mkt. Mgr. Private Client Services; Dudley Nigg is EVP, (415) 477-1000.

E*Trade
www.etrade.com

E*Trade has the Web figured out with a fast loading, nice looking, and relatively uncluttered front page.

E*Trade (Palo Alto, CA; $5.5 billion managed; 182,000 active accounts) will become the first brokerage to offer in-bound online funds transfer from any checking account in the United States. The discount brokerage will use National Processing Company’s (NPC) VirtualPAY system for info on NPC’s first implementation with Mobil Oil). The online transfers initiated from E*Trade’s Web will be free; so not only will they be more convenient for users, they will be cheaper than mailing a personal check or transferring funds by wire. NPC, a publicly traded affiliate of National City Bank, is the second largest processor of credit and debit card transactions handling 2.5 billion transactions annually.
Contacts: Judy Balint is SVP at E*TRADE, 415.842.8600. Carl Sammons is SVP Electronic Commerce at NPC Corporate Services, 502.364.2000.