Milestones For E-Trade, Schwab

Shares of two leading online brokers E-Trade and Charles Schwab rose after the companies reported milestones on Tuesday.

Palo Alto-based E-Trade (EGRP) said it got an OK from regulators to begin selling mutual funds and money market accounts.

San Francisco-based Charles Schwab (SCH) said its assets held in customer accounts surpassed $500 billion in January and ended the month at $521 billion.

Shares of E-Trade gained 3/4 to 46 3/4 on Tuesday afternoon; Schwab added 2 15/16 to 65 5/8. The stocks traded up even as a rally on Nasdaq fizzled.

E-Trade said it won approval from the Securities and Exchange Commission and the National Association of Securities Dealers to enter the asset management business.

The approvals pave the way for E-Trade mutual and money market funds under the new unit, E-Trade Asset Management, a registered investment advisor.

E-Trade plans to launch the E-Trade S&P 500 Index Fund, its first fund, next week, with plans to roll out additional index, enhanced-index and "fund of fund" products in the next 12 to 18 months.

"Adding asset management to our portfolio of businesses is another step in E-Trade's strategy to diversify its revenue stream by leveraging its electronic business model and its growing base of online investors," E-Trade President and COO Kathy Levinson said in a statement.

Schwab Chairman and Co-CEO Charles R. Schwab said customer assets are up by more than 40 percent from January 1998.

"The company's focus on serving investors, as well as our combination of multi-channel access, information and guidance, have been key contributors to this growth," he said in a statement.

Schwab said it handled an average of 153,000 trades per day in January, and that the principal value of customer online securities transactions averaged $2.6 billion per day during the month.

Written By Steve Gelsi, CBS MarketWatch