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April 1, 2001

E*Trade's Technology Deal

By Peter Chapman

Technology was not the only reason why E*Trade bought Versus Technologies for $174 million last year, an executive of E*Trade says.

Steve Ferrando, managing director for institutional and international deployment at E*Trade says Versus' license for E*Trade Canada was a much more important consideration.

In fact, he said, it did not evaluate Versus' RouteX order routing technology until after the acquisition, then comparing it with other products on the market.

The main reason for the deal was because Versus held the license for E*Trade Canada. E*Trade also coveted Versus' large institutional client base. Many of these investors like trading across borders. Its customers account for approximately three-quarters of all Canadian assets under management and 10 percent of each day's trading volume on the Toronto Stock Exchange, according to the company.

Versus grossed $26 million in fiscal year 2000, double its revenues of the previous year.

In addition to RouteX, Versus also provides traders with various order management systems. A front-end system called Venom is popular. E*Trade Institutional plans to use that software on some of its trading desks. Versus also offers two program trading platforms, a homegrown Portfolio Trader and ITG's QuantEx.

Versus also attempted to introduce an electronic call auction system, dubbed Canadian Call, to the Canadian market a few years ago. That venture failed.