U.S. online stock brokerage ETrade Group Inc. announced yesterday that it signed an agreement to buy Toronto-based Versus Technologies Inc., which owns the license to trade under the ETrade brand name in Canada.
The $174 million deal will give ETrade access to Versus' retail and institutional client base, adding about 45,000 retail client accounts to ETrade's 2.6 million.
In addition, Versus has 100 institutional clients -- compared to ETrade's 650 -- and the Versus Network, a scalable proprietary trading platform for institutional investors that handles about 13% of the daily share trading volume of the Toronto Stock Exchange.
Canadian institutional investors using The VERSUS Network represent over 75% of the capital managed by institutional investors in Canada, according to a company release.
The ultimate goal, according to a published statement from ETrade CEO Christos Cotsakos, is to create a global cross-border trading network that spans 20 countries.
ETrade has already begun its global trading program, with Swedish customers now able to buy U.S. stocks. By the end of the year, Australian and French customers will be able to do the same through ETrade subsidiaries in each country, said Steven Ferrado, ETrade's managing director of institutional and international deployments.
The one piece missing, he said, has been a good order routing mechanism -- which Versus will now provide.
"We think that their order management capabilities and software is a little bit ahead of what's currently in ETrade Global," he said. "In fact, phase two of ETrade Global was to go out and find a replacement for our order management system. Versus is very efficient, and very interesting in that it's geared to support a combination of both institutional and retail business."
In addition to the U.S. and Canada, ETrade currently has branded Web sites in Denmark, Korea, Japan, the U.K., Sweden, France, Australia and New Zealand.
Versus has been a strategic partner of ETrade since 1997, when ETrade Canada was formed as the first ETrade licensee worldwide, ETrade said.
The acquisition shows that the alliance was a success, according to George Barto, an analyst at Stamford, Conn.-based Gartner Group Inc. He added that ETrade will probably acquire other successful partners that offer ETrade services in other countries.