E*Trade Goes After Datek Users With Discount Package

A day after setting plans to acquire Tradescape, E*Trade is looking for more customers.

Author:: Kristen French
Publish date:: Apr 11, 2002 5:47 PM EDT

E*Trade

is going after

Ameritrade's

newly acquired Datek customers in what marks the latest attempt by a big industry player to make up for low volume by nabbing new traders.

After losing out in the bidding war for Datek, E*Trade is advertising on its home page a "special offer for Ameritrade and Datek customers" who transfer their accounts to the company's Power E*Trade active trader platform. The offer, which requires a minimum deposit of $5,000, isn't particularly rich. It includes a $100 bonus, some 30 free stock trades and a $50 refund toward transfer fees.

E*Trade added some heft to the active trader segment of its business Wednesday when it announced the acquisition of

online brokerage firm Tradescape. Tradescape will give E*Trade an additional 100,000 trades a day, bringing its overall transactions to more than 200,000 a day.

The last time E*Trade tried to pick up migrating customer accounts, it was moderately successful, analysts said. In late February, the company launched an advertising campaign in Toronto's biggest newspaper aimed at luring away

Bank of Nova Scotia's

new

Charles Schwab

(SCH)

customers. Those ads promised customers who would defect up to $1,800 cash in exchange for 36 trades a year.

Guy Van Rooyen, a senior analyst for financial services in research firm Gomez's Canadian offices, believes E*Trade might have pulled in roughly 2,000 of the 28,000 accounts that Bank of Nova Scotia bought from Schwab.

It's hard to say how the cost of capturing migrating investors with advertising compares with the cost of acquiring them outright. Ameritrade is

paying $1.3 billion for Datek, a price that many analysts think was high. In the meantime, analysts don't expect competition for active traders to escalate into a price war.

"They'll probably

use these teaser offers, introductory offers, rather than immediate

price cuts across the board," said Dan Burke, another Gomez analyst. "Active traders are cost-driven and execution-driven. They'll be just as interested in the services available to them."