E-Trade Financial Corporation (stylized as E✱TRADE, often approximated as E*TRADE), a subsidiary of Morgan Stanley, offers an electronic trading platform to trade financial assets including common stocks, preferred stocks, futures contracts, exchange-traded funds, options, mutual funds, and fixed income investments. It also provides services for employee stock ownership plans, student loan benefit administration, advisor services, margin lending, online banking, and cash management services. The company receives revenue from interest income on margin balances, commissions for order execution, payment for order flow, and management services. The company has 30 branches.
In 1982, William A. Porter and Bernard A. Newcomb founded TradePlus in Palo Alto, California, with $15,000 in capital. In 1991, Porter and Newcomb founded E-Trade Securities, Inc., with several hundred thousand dollars of startup capital from TradePlus. E-Trade offered its trading services via America Online and Compuserve.
By 1995, the new American information revolution was firmly underway. The appearance of so-called multimedia PCs, which bundled sound, video, and–particularly important for E*Trade–modems into relatively inexpensive and easy to install packages, brought a whole new wave of people to computers and online services. E*Trade soon found itself joined by competing online investment services, forcing it to drop its transaction rate to $19.95. However, the company had already taken the lead among the growing home investors community, which was also served by such popular online services as America Online’s Motley Fool investment information area. E*Trade found its system overloaded with customer calls, and in the summer of 1995 was forced to quadruple its systems. By the end of that year, the company’s revenues had doubled again, reaching $22.3 million and generating a net income of $2.6 million.
The online services proved merely a taste of things to come. By the end of 1995, the Internet–and more specifically its graphical World Wide Web interface–had become the buzzword of the country. A new range of service providers sprang up, countering the hourly charges of the online services with unlimited access at flat-rate monthly fees. E*Trade quickly set up shop on the World Wide Web as well. Within weeks after the company’s entry on the Web, the Internet accounted for more than 13 percent of the company’s sales.
E -Trade derived over 80% of its revenues from trading commissions and became the first online brokerage firm. As other discount players quickly ensued after the success of E*Trade, and a new era of online trading dawned on the brokerage industry.
During the latter half of the 1990s E*Trade continued its upward climb. The company expanded its services to customers in Australia, Germany, Israel, and Japan. Adding to its strong presence in online trading, E*Trade began setting its sights on becoming the world’s first digital financial media company.
Today, E*TRADE is an online brokerage pioneer, well-known for its full-featured mobile apps, top-notch options trading tools, and customizable user experience.
According to en.wikipedia; fundinguniverse.com; investopedia.com. Source of photo: internet
