FREESERVE, the UK's largest internet service provider, said it would offer online securities trading in Britain to take advantage of the rapid growth in investing over the internet, pitting itself against Charles Schwab, the world's biggest discount broker. The online brokerage service is a joint venture with California-based Global Net, a provider of online financial news and information; First Marathon, a Canadian broker, and Mesirow Financial, a Chicago-based firm that specialises in clearing trades. Freeserve's venture comes as the number of internet dealing accounts has increased five-fold to 50,000 from a year ago. Freeserve will compete with US leaders Schwab and E*Trade Group which started internet trading last month. "It's a thickly populated field," said Miles Saltiel, an analyst at WestLB Panmure. "Freeserve's advantage is that it has an awful lot of subscribers." Freeserve said the joint venture would take advantage of Mesirow's experience in clearing and executing trades. The online brokerage service will be linked to Freeserve's Money Channel, UK-iNvest.com, which is owned by GlobalNet. "We are pleased to be part of this rapidly growing revenue, generating business that will take advantage of access to more than 1.32 million active Freeserve accounts," John Pluthero, the company's chief executive, said.
Freeserve was created last year by Dixons Group and went public last month in a share offering that valued the company at pounds 1.51bn. The shares were priced at 150p but soared as much as 48 per cent on the first day of trading. The price reached a high of 244p in the first two weeks of trading but has since retreated to 206p.
Freeserve has leap-frogged America Online to grab a third of Britain's internet access market, set to be worth $1.9bn (pounds 1.2bn) by 2003. Some analysts believe though that its dominant share of the market may be eroded through competition from rivals who offer free services.