Bank of America offers free online stock trades
Wednesday October 11, 8:34 am ET
NEW YORK (Reuters) - Bank of America Corp. the second-largest U.S. commercial bank, now wants to be your broker too.
The Charlotte, North Carolina-based Wednesday said its brokerage unit will offer free online stock trades for individual investors who deposit $25,000 or more at the bank, the latest volley in a price war among online brokers.
The new pricing plan is effective immediately in the U.S. northeast and will roll out nationwide by next spring.
Competition among online brokers has fueled a series of steep price cuts for basic stock trades during the past year, continuing a 30-year trend that has made buying and selling shares a commodity.
Leading brokers such as Charles Schwab Corp. (NASDAQ:SCHW - News), E*Trade Financial (NYSE:ET - News) and TD Ameritrade (NASDAQ:AMTD - News), suffering the steady erosion of commission revenue, have been forced to enhance research and financial planning services to attract and retain customers.
Brokers are also promoting accounts that charge fees based on assets and offer unlimited trading, with an emphasis on advice and portfolio planning, or targeting ultra wealthy families that tend to generate the most fees.
To be sure, financial companies have tried to displace traditional Wall Street firms with free trades before.
American Express Co. (NYSE:AXP - News) promoted a brokerage account with no-commission trades in 1999, but abandoned the effort due to insufficient demand. But BofA is betting people will want to do their investing with a bank that also boasts 5,700 branches across the country.
"Customers appreciate the simplicity and convenience of using a single trusted financial institution for all their banking and investment needs," said Liam McGee, BofA's president of global consumer and small business banking.
BofA has 20 million online banking customers and 1.6 million brokerage accounts.
The new scheme does not apply to margin transactions, option trades, stock registration or account transfers and processing. |
