*** E*Trade Shuts Hong Kong Business for Second Time ***

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E*Trade Shuts Hong Kong Business for Second Time, SCMP Reports
2010-07-26 22:44:39.184 GMT
By Stanley James

July 27 (Bloomberg) -- E*Trade Financial Corp., a New York-based online brokerage, closed its trading business in Hong Kong for the second time in seven years, the South China Morning Post reported, citing Helen Chan, the company’s Hong Kong-based vice president.

Chan said the closure was a strategic decision and that the company would focus on its U.S. business, according to the Morning Post. E*Trade shut its Hong Kong trading platform in 2003, the report said.

To contact the editor responsible for this story:
Stanley James at +852-29776637 or
sjames8@bloomberg.net

http://www.bloomberg.com/news/2010-07-26/e-trade-shuts-hong-kong-business-for-second-time-scmp-reports.html

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Online broker shuts local business for second time
By Naomi Rovnick

American online stockbroker E*Trade has closed its Hong Kong trading business for the second time in seven years.
The company, which only restarted local share trading a year ago, denied cutthroat competition in the overcrowded local market had contributed to poor performance.

'This was a strategic decision,' E*Trade Hong Kong-based vice-president Helen Chan said. 'We want to focus on US investing because that is our core competency.'

E*Trade, which will continue offering Hongkongers a platform to buy and sell US companies' shares, told customers via email last week to their local brokerage that their accounts will be closed.

The company has also ceased operating a business in Britain selling London-traded shares.

In 2003, the last time E*Trade closed its local trading platform, the company also insisted the move was not prompted by bad performance, telling the South China Morning Post it was a 'corporate refocusing effort'.

Because Hong Kong is flooded with stockbrokers and banks offering cheap online trading, charges have fallen through the floor since 2003, when the government's scrapping of the 0.25 per cent minimum commission rate prompted brokers to take to the streets in protest.

'The competition between brokers in Hong Kong is cutthroat, and commission has become very cheap,' said Francis Lun Sheung-nim, the general manager of local broker Fulbright Securities. 'You need incredibly high trading volumes to succeed.'
E*Trade's Hong Kong brokerage customers were paying a flat 0.1 per cent basic commission rate, which is in line with the rest of the local market.

In contrast, the company can charge much larger fees for its niche service broking American-listed shares in Hong Kong.
Customers pay flat rates as high as US$19.95 for each US trade. So a retail investor spending US$1,000 on American-listed shares would pay about 2 per cent commission.

Chan said E*Trade has not made any lay-offs as a result of closing the Hong Kong trading accounts. She also said E*Trade will transfer its Hong Kong customers' local trading accounts to a local broker of their choice.

E*Trade, which was still advertising its local brokerage service on its website yesterday afternoon, informed customers on July 19 that their Hong Kong accounts would close on September 8.

The company has told customers to repay margin loans by August 9. It will sell securities in customers' accounts if they do not settle their debts by then.

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