Online trading house E*Trade Group, whose shares took a one-two punch, falling more than 8% each day on Monday and Tuesday amid concerns about it being undercut on trade fees, says it is comfortable with its current pricing structure. In spite of price reductions by competitors and a 40% average industry decline in online trading fees in the past year, E*Trade foresees no move from its standard $15-per transaction fee. The company says it is happy with current customer growth – at around 8% per month for the past few months – and with the caliber of client it is attracting at that price point. It is confident that price is not the deciding factor for its customers, described by industry analysts as a mid-tier segment in a market that is in a process of stratification. These mid-tier customers are good for about 24,000 trades a day, on average, the company says, and at the time of last month’s year-end financial report, the assets in the accounts of E*Trade’s clients was figured at $7.7bn. The daily trading average swelled to between 45,000 and 50,000 on the recent Monday and Tuesday when Wall Street took its wild ride, creating access problems. E*Trade asserts it will add $20m this year to the $50m it already spends on its infrastructure to build out its capacity from 15,000 users at a time to 25,000. On the heels of yesterday’s announcement on its purchase of the OptionsLink business from Hambrecht & Quist LLC, E*Trade shares fell another $1.25 to $25.25.
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