eStar CEO Albert Wong told ZDNet Australia that the company couldn't compete with the big players such as Westpac.
-We couldn't make it work in the environment," he said. -Overall we just can't sustain it, not at those prices. There were a couple of months where we broke even, but in the end there's no point spending a dollar to get fifty cents."
eStar went live in January 2000 and listed on the ASX in August that year, after raising AU$20 million in an IPO. For the last 18 months it has seen losses averaging AU$85,000 to AU$90,000 per month. It has approximately AU$10 million left, which will be invested elsewhere.
-We're looking at a number of options, suffice it to say we'll be avoiding green-fields projects," said Wong. -We're looking for old economy projects."
Mark Flynn of investment advisory company Hartleys told ZDNet Australia there were several reasons why online share trading companies are finding it tough.
-Brokerage charges have continued to come down and the big players are the banks such as Westpac and CBA who are able to offer the most competitive rates because of their size," said Flynn. -The systems they have developed are now up to speed with the other Internet brokers so there has been a shift to the banks who can also offer advice (for extra charge)."
-Integrated Real-time Equity System now has a virtual monopoly on market tracking software after merging with Reuters. They are now able to charge what they want making it very expensive for the smaller players," he added.
