Also published in Crikey!
as well as The Sheet.
Commonwealth Bank’s stockbroking business Commsec may face a bigger challenge this year to its leadership of the online broking market as competitors Westpac and National Australia Bank market have upgraded online trading platforms.
With listed company IWL buying Westpac’s online broking partner JDV last year, National and Westpac now both have the same company running the back end of their broking platforms. By 2007, Westpac and National will be operating on the same software platform, as IWL integrates and rationalises its software systems.
Commsec, though, is likely to remain the undisputed leader in the online broking market, unless Etrade and IWL consolidate into one group (as the market likes to speculate).
Commsec has nearly a 50% share of the online broking market, making it about twice the size of IWL, its nearest competitor. Commsec executes 15% of all trades on the ASX with the average transaction size being $8,000. Overall, Commsec handles 15,000 trades, or $120 million worth of transactions daily as counted by the ASX (or 30,000 combined buy and sell orders).
This leadership gives Commsec unprecedented access to initial public offerings, something no other high-street bank can offer. Commsec also has the cheapest trades, at $19.95, for anybody with an investment account or margin loan with the bank.
Commsec says it handles 6,000 to 7,000 calls a day at its Sydney call centre, which employs about 150 people.
IWL accounts for about five per cent of ASX trading while Etrade handles about 4.5%.
NAB has a chequered history in online, but despite this, Paul Maddock, general manager of National OnLine Trading says it had 80,000 customers prior to its service upgrade. Since December, the National has been white labelling IWL’s platform and has now introduced an extra service level, exchange traded options, conditional orders and SMS alerts.
Westpac, which doesn’t disclose customer numbers but may have more stockbroking customers than National, still deals on its own ASX licence and retains more control on the customer service side of the client relationship.
Etrade also handles trades for customers of ANZ Bank, Bendigo Bank and a dozen or so credit unions, and plans to stay ahead through innovation in the products offered.
Last year Etrade was the first to introduce Contracts For Difference and is maintaining significant investments in its operating platform.
According to Etrade’s results for the first six months of the 2006 financial year, it increased customer accounts by 13% to 215,000. During the same period, trades in the stockmarket grew by 34% in 2005 to 25 million. ANZ accounts for 34% of Etrade’s business, or about 74,000 accounts.