BofA Set to Attract New Investors - Analyst Blog

On Thursday,

(

) announced that it expects to start an online trading service on June 21, which will likely attract young and new investors. The new service, Merrill Edge, is supposed to give tough competition to other online trading services. 

The existing brokerage firms, which provide online trading services include

(

),

(

) and

(

). Until now, these services are the ultimate consulting guide for new investors, who are not financially well-off to avail a full-fledged service advisor. 

Under Merrill Edge, the combined services of Merrill’s Internet and call center platforms and BofA’s Quick & Reilly services will be provided to the customers. Since 2009, when BofA acquired Merrill Lynch, it has been trying to integrate the operations of both the companies and this latest move is also aimed at this. 

In the next few months, approximately 500,000 existing online brokerage customers of BofA will be transferred to Merrill Edge. Through Merrill Edge, linked assess will be provided for banking, investment products, credit and retirement services to the customers. The service will also give telecommunication access to its customers apart from providing the online service. Therefore, the customers will get the convenience of online service through BofA’s 6,000 branches and about 18,000 ATMs. 

Merrill Edge is targeting customers with $250,000 or less in investible assets and accounts with minimum $25,000 will be offered 30 free online trades in a month. 

Trading through Merrill Edge will cost $8.95 each, which is in line with what the customers are paying for trading through Schwab and comparatively lower than $9.99 per trade charged by E*TRADE and TD AMERITRADE. 

Hence, Merrill Edge will enable BofA to garner more customers and increase its market share in online brokerage business. The broking service will make BofA a one stop destination for many of its existing and new online trading customers. 

Though there remain concerns regarding BofA’s inconsistent credit quality and net interest yield compression, we anticipate continued synergies from its large scale operations and balance sheet restructuring.