'E*TRADE to come to India early next year'

Q&A: Leslie Whiteford

Earlier this year, E*TRADE, one of the leading online brokerage houses in the US used by over 4 million clients, increased its stake in Indian brokerage house IL&FS Investsmart to 43.85 per cent by acquiring 16 per cent from the public through an open offer (and open market operations). Through this, the US firm has become the single biggest stakeholder and promoter of IL&FS Investsmart, in which IL&FS owns 29 per cent.

The Indian brokerage house along with IL&FS, one of the country's leading infrastructure and finance companies, will launch the E*TRADE brand in India by early 2008, reveals Leslie Whiteford, MD & CEO of IL&FS Investsmart, in an interview with Rajesh Abraham and Rajesh Bhayani. He clarifies that the troubles related to sub-prime lending by E*Trade in the US will have no impact on its Indian venture. Excerpts from the interview:

Following the consolidation of E*TRADE's stake in the company, things seem to have settled down for IL&FS Investsmart. What new initiatives are being planned for the firm?

After the open offer, we are consolidating and restructuring our operations. E*TRADE, the largest shareholder, is known for its online trading. In Asia-Pacific, the share of internet trading is 20 per cent. In the US, 60 per cent of retail trades are online, while in Europe it is 30-35 per cent. In India, the figure is higher than the Asia-Pacific average.

So, how to further increase the volume is a big challenge for us. We are focusing on our core business and integrating various businesses to become a financial multiplex. We want to be a one-stop-shop for all financial needs of the customers, be it investments in equities, mutual funds, life insurance products or their borrowing requirements. They should get all these under one-roof.

How will Indian customers benefit from your international experience?

We are planning to introduce brand the E*TRADE in India in the first half of 2008. There is huge scope for internet trading in the country because of the growing internet penetration, large population of net savvy professionals and fast growth of business process outsourcing.

Does expansion of internet trading result in a slowdown in your branch expansion plans?

It will not be in back seat but we will be a little more focused in terms of location. It will be designed as the one-stop-shop for meeting various financial needs of the customers.

And with E*TRADE brand what will happen to brand IL&FS?

IL&FS is strong Indian brand, which is an established name and has the trust of the investors due to its quasi-government image. It is important for us. I don't know in which direction the shareholders would want to go in the future. Our efforts will be to combine fundamental strength with cutting-edge technology.

Currently, we are discussing with various marketing agencies and brand experts to introduce brand E*TRADE. As far as E*TRADE is concerned, the JV strategy is unique to India. Since the Indian market is quite is large, the presence of a local partner is important.

E*TRADE is more of a discount broking house and other Indian broking houses provide value added services like research and advisory services. What are your plans?

Our quality of research has been improving though it remains a huge task. In India it is important to provide advisory services also.

We are strengthening our research team. Now we are having good research work being done on equities, commodities, mutual funds etc. We will continue to invest in research.

What about customers' need for funding?

We already have a non-banking finance company licence from RBI. We will focus in the area of financing the customers' needs and mortgages. We are already doing margin funding and IPO financing. Customers' need will drive our decision to enter direct banking.