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ETR`s Chairman`s Letter to Shareholders

Document date:  Mon 06 Mar 2000
Published:  Mon 06 Mar 2000 10:59:29
Document No:  203216
Document part:  A
Market Flag:  N
Classification:  Chairman's Address to Shareholders

ETRADE AUSTRALIA LIMITED                      2000-03-06  ASX-SIGNAL-G

HOMEX - Sydney                                                        


E*TRADE Australia (ASX Code: ETR) today announced continued strong
gross brokerage growth of more than 30% in February over January, and
36% in January over December.

HIGHLIGHTS (Unaudited)

* E*TRADE Australia now accounts for over 30% of all online trades
  executed on the ASX
* February trading volume up 33% on January 
* February gross brokerage revenue up more than 30% on January 
* January & February gross brokerage annualised exceeds $30m 
* Customer accounts exceed 43,000 - up 26% since 31 December 1999 
* ANZ E*TRADE account opening rate accelerates to more than 48% of 
  new accounts in February 
* ANZ ramps up its marketing campaign, targeting ANZ customers, staff 
  and shareholders

In its recently lodged half-year report, the company reported a
consolidated operating loss before abnormal items for the six-month
period ended 31 December 1999 of $6.12 million. As previously
reported, the company posted an abnormal non-cash expense of
$42,180,000, representing the book value of the 6 million shares
issued to ANZ under the alliance with the Bank, approved by
shareholders in August 1999.

With cash reserves at 31 December 1999 of $29.6 million, the company
is in a particularly strong financial position.

E*TRADE Australia has been operating in Australia for just over 22
months and already accounts for about 30% of online trades on the ASX
and is regularly amongst Australia's Top 5 brokers by volume. A
recent survey confirmed E*TRADE Australia is the leading online
brand. In addition, measured by trades executed, the company is
currently the second largest online provider of Internet stockbroking
services in Australia. As the number of ANZ E*TRADE customers
continue to increase, E*TRADE Australia will continue to gain ground
on the market leader. 

"With the ANZ account openings making a strong contribution to 
customer growth these past two months, E*TRADE Australia remains 
confident it can achieve market leadership in terms of online trades, 
later this year," said Mr Kerry Roxburgh, Group Chief Executive 
Officer, E*TRADE Australia. "It's been a tough battle, but we have 
clearly established our brand as the leader in the online market. And 
measured by trading volumes, we are clearly the second largest online 
broker in Australia." 

In February, the number of E*TRADE Australia's Customer accounts grew
strongly, exceeding 43,000. This is an increase of 26% since 31
December 1999, reflecting a strong performance from the ANZ which
contributed 48% of new accounts last month. In February, E*TRADE
Australia's customers executed 33% more trades on the ASX than in
January, with the company participating in an average of 7% of all
trades for the month. Annualised gross brokerage revenue for January
and February combined exceeds $30 million and the current value of
registered customer assets (cash and Securities) is $1.42 billion.

"We know that the trading volume increase in February of 33% over
January partly reflects market conditions, but it is also a
reflection of the successful launch late last year of our
professional internet service, E*TRADE Australia pro. This free
offering has been keenly sought by professional traders, financial
planners and private client brokers seeking to utilise this
exceptional dynamic trading and information system," said Mr


In the past two months, the ANZ E*TRADE Online investing(1) service
has been embraced by ANZ customers. Following its soft launch late
last year, ANZ originated account openings have accelerated in
response to ANZ's strong marketing programme targeting their
customers, staff and shareholders. The success of recent marketing
activities has seen an increase in the number of new account
openings, with ANZ E*TRADE Online Investing accounts now comprising
over 10% of all accounts.


"In November last year, we introduced E*TRADE Australia Pro, a free
software-based service providing dynamic data feeds for our active
investors enabling them to literally place and watch their orders hit
the market in just a few seconds. We remain the only stockbroker in
Australia to offer active investors access to their accounts over the
web and via PC-based software using the Internet. Very active traders
and financial planners have enthusiastically adopted this dynamic
service. We are now offering private client advisers an outstanding
opportunity to service their clients online through E*TRADE
Australia, from their own desk. This positions E*TRADE Australia
squarely in the private client stockbroking business," said Mr


Introducing his report to shareholders for the December half year,
E*TRADE Australia Chairman, Mr Malcolm Spry said, "I am delighted to
have the opportunity to tell you just how well E*TRADE Australia is
performing as a business, as evidenced by the company's pleasing
half-year results."

"E*TRADE Australia has consolidated its strong position in the online
broking industry by reporting operating revenues of $7.4 million for
the half year ended 31 December 1999. This caps off an exceptional
period of growth for the company, which saw revenues increase 90%
from $3.9 million for the six months ended 30 June 1999. As we enter
the year 2000, we can expect to see a significant change in our
business as many of the benefits of our major alliances with the ANZ
and Computershare are realised," said Mr Spry.

(1) In June 1999, E*TRADE Australia signed an agreement with ANZ to
form a strategic alliance. The innovative structure of this agreement
gave ANZ E*TRADE access to ANZ's 4 million-strong customer base.
Under the agreement, ANZ received the opportunity over the 3 years to
September 2002 to be issued with up 40 percent equity in E*TRADE