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Tuesday, June 1, 1999 Published at 20:28 GMT 21:28 UK

Business: Your Money

Merrill Lynch moves online

Merrill Lynch is stepping up its Internet presence

America's largest broker, Merrill Lynch, has finally decided to roll out a full online trading service.

The move has been forced on the 85-year-old Wall Street institution by the rapid growth in online share dealing, and is a further sign of the rapid technological revolution transforming the way shares are bought and sold.

The days when stock markets were like gentlemen's clubs, dominated by brokers placing orders for wealthy clients from leather armchairs seem long gone.

With new technology, the stock market is awash with amateur traders who buy and sell stocks at home by punching personal computer keyboards.

Cut price Internet-based rivals like Charles Schwab have grabbed a substantial slice of the share-buying market in the past two years.

[ image: The Internet allows people to buy and sell from their homes]
The Internet allows people to buy and sell from their homes
Online brokers processed a record 630,000 trades a day in April, up 40% from first-quarter levels, one Wall Street analyst estimated recently.

San Francisco-based Schwab, the largest US discount and Internet broker, has become an almost unstoppable rival, processing more than 160,000 trades a day.

Schwab is now bigger in market capitalisation than Merrill, which employs about four times as many people.

Online brokers like E*Trade are also flourishing, capturing increasingly greater chunks of the growing number of stock trades crossing the Internet.

Can't beat 'em

Merrill and other traditional Wall Street houses like Morgan Stanley Dean Witter & Co. have found themselves unable to stand against the rush of investors looking to trade stocks on the Internet

Merrill Lynch had resisted Internet trading for fear of losing the substantial commission fees it received from advising and executing deals for its wealthy clients across the world.

But for Merrill chairman David Komansky it was now a case of 'if you can't beat them, join them'.

"The undeniable fact that there is a segment of the marketplace that wants to access the market through technology and through online investing was indisputable," he said.

"It appeared foolish for us, after a period of time, to ignore that part of the marketplace."

Internet trading has also led to US stock markets unveiling plans to open into the night to avoid losing out to electronic trading systems.

"For Merrill it could be a little difficult because some brokers could lose potential commissions to online trading but it's better than losing the entire customer," Charles Vincent, an analyst at PNC Institutional Investor Services said.

Soda fountain

Merrill's shares fell $6.44 to $77.56 on Tuesday on fears the move might eat into profits near-term as commissions decline and brokers become disgruntled.

The online roll-out would start in the United States and eventually move abroad, Merrill said.

From July, for a minimum annual fee of $1,500, clients could do an unlimited number of trades in most securities online.

Another type of account would charge $29.95 per trade for U.S. equities, the firm said.

Other Wall Street firms which also resisted the lure of cyberspace trading are in the process of expanding online as well.

Salomon Smith Barney, the securities arm of financial services company Citigroup, recently said it would offer Internet trading later this year, reversing a previous policy of limiting clients' Internet access to research and portfolio checking.

Merrill Lynch was founded in 1914 by Charles Merrill, son of a Florida doctor, and Edmund Lynch, who was selling soda fountain equipment when they met in New York.

Their aim, which appears to have been achieved by the cut price Internet brokers, was to make share dealing accessible to the general public - to "bring Wall Street to Main Street".

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