© 2020 SourceMedia. All rights reserved.

Merrill's race to zero expands throughout self-directed platform

Merrill Edge is officially joining the ranks of commission-free.

“[We] are now making [commission-free trading] available to all of our self-directed clients,” Aron Levine, head of consumer banking and investments at Bank of America, said in a statement.

Bank of America’s retail investment platform had dropped trading fees for ETF, stock and options at the end of October, but clients below certain balances were still paying those fees.

The move comes amid a race to zero on ETF, stock and options trading ignited in October when Schwab announced it would drop its commissions. Before the end of the day, TD Ameritrade had done the same. E-Trade and Fidelity would soon follow suit.

In its October announcement, Merrill Edge made unlimited commission-free trading available to clients in the company’s Preferred Rewards program, which requires having a personal checking account as well as three-month average combined balances of at least $20,000 across Bank of America and Merrill accounts, according to the company.

At the time, clients with lower balances still had to pay the trading fees, although they were reduced from $6.95 to $2.95 per trade, according to the company. The “vast majority” of Merrill Edge clients became eligible for free trading with this change, according to a company spokesman.

Now that firms aren’t competing on trading costs, Levine said in the statement, the bar has been raised.

“With free trades now an industry standard, attracting clients and building lifelong relationships will depend even more on the value investment firms bring to the table,” he said.

These trades will still be subject to fees — option trades will continue to have a $.65 per-contract fee and stocks and ETFs will still have a transaction fee between $0.01 and $0.03 per $1,000 of principal, according to the company.

A Bank of America spokesman declined to comment on how this change is projected to affect company revenue.

Competitors that dropped commissions have stated they will take million-dollar revenue cuts each quarter because of the eliminated fees.

For reprint and licensing requests for this article, click here.