A group of private Israeli entrepreneurs, including Baruch Halpert and Yaakov Reif, in partnership with Jerusalem Global, has been awarded a franchise by E-Trade of the United States, which engages in share trading via the Internet, to operate its services in Israel. The group intends to put the commercial services into operation toward the end of 1998.
E-Trade actually serves as a broker, enabling customers to open a special account with it, and trade in shares through that account. The investor can connect to his private account, and place buy and sell orders from there, for immediate execution and at all hours of the twenty-four, without having to contact a bank clerk. The company itself collects commissions for executing the investor’s transactions, and also has revenues on credit extended to customers for the purchase of the securities. The securities themselves constitute collateral for the credit.
E-Trade was issued to the US public in September 1996, and its current market value is $1.1 billion. The company’s revenues amounted, in 1997, to $143 million, of which $50 million were earned in the last quarter. The company’s principal competitors in the United States are the Schwab investment firm and Fidelity company. E-trade has begun operating in other countries, and presently runs the service also in Canada and Australia.
According to Baruch Halpert, the founding of E-Trade’s Israeli branch enables Israeli investors to bypass the restriction prohibiting them from opening bank accounts outside Israel, which precludes their trading via the Internet. The Israeli franchisees are presently in process of raising capital in order to set up the system and adjust applications to the local market. The company intends also to permit small accounts to be opened, with a minimal sum of NIS 5,000, so as to accommodate private investors carrying out transactions in small amounts.
Published by Israel's Business Arena March 2, 1998