uu

the catch? you gotta have $25K in combined BOA accounts... damn, too bad, I am working for a investment bank, so I can't open outside trade accounts, doh!!!!!!!


Bank of America To Offer Free Trading Move Applies to Clients With as Little as $25,000 In Deposits;
Escalating an Industry Price War


The Wall Street Journal

D1
English
(Copyright (c) 2006, Dow Jones & Company, Inc.)

BANK OF AMERICA Corp., escalating a raging price war as banks and brokerage firms battle for online stock-
trading customers, plans to offer as many as 30 free trades a month to millions of customers with at least $25,000
in deposits.

The move, to be announced today, is effective immediately in New York City, Boston and other areas in the
Northeast where Bank of America --which is based in Charlotte, N.C. --is a relative newcomer but has been
pushing hard to challenge Citigroup Inc., J.P. Morgan Chase & Co. and other financial giants on their home turf.
Bank of America officials are likely to extend free stock trades to the rest of the U.S. by February.

As many as a third of Bank of America's 50 million individual consumer-banking customers are ultimately expected
to qualify for free online trades. By comparison, Charles Schwab Corp., a leading online brokerage, has about 6.8
million active accounts. To be eligible, Bank of America customers must have $25,000 or more in any combination
of checking, savings and other deposit-related bank accounts.

By eliminating stock-trading fees previously ranging from $5 to $10, Bank of America is trying to leverage its
5,700 branches in 29 states --and its leading market share of 10% of all U.S. bank deposits --to vault the bank's
brokerage unit from also-ran status. Bank officials expect the free stock trades to generate growth in mortgages,
checking accounts, certificates of deposit and other lines of business, while helping Bank of America fend off an
increasing invasion by brokerage firms that are trying to win business from traditional banks.

Consumers will likely see further price cuts on online trades as other banks and brokerage houses feel the
pressure from Bank of America. The $25,000 threshold is substantially lower than the balances typically required
for free stock trades. Schwab, based in San Francisco, offers $9.95 trades for households with $1 million in assets.
Wells Fargo & Co., also of San Francisco, gives 50 free trades a year to customers with at least $250,000 who link
their brokerage account to a specific group of bank products. Last week Zecco Holdings Inc.'s Zecco.com started
offering free trades to build traffic to its Web site, which aims to become a social-networking hub for traders.

Other companies have tried offering free trades and failed, hurt by rising regulatory costs and other factors. Yet no
bank has made as big a play as Bank of America, with its broad strategy of using free trades as a perk for a
dedicated relationship, echoing frequent-flier and other reward programs.

Unlike pure brokerages, Bank of America's motive isn't getting a customer's trading business per se. Instead, the
company wants people to centralize their assets in one place, in keeping with its long-held tenet that customers
are most happy and profitable when doing business with one financial-services company. So far, some consumers
have resisted the financial-supermarket model, but Bank of America says its research shows that more people are
warming to the idea.

Bank of America's move is "an industry changer" and a "fundamental change of business models," says Liam
McGee, president of consumer and small-business banking at the company. The bank is keeping its 2,000-person
army of brokers, who will still charge for advice and stock trades not made online.

Another big reason the bank is trying to ramp up its online-trading business is because it has hit a federal ceiling
on deposits that sharply limits its ability to expand through acquisitions. Instead, bank officials are increasingly
using Bank of America's sheer size as a competitive weapon, much like Wal-Mart Stores Inc. is doing with its $4 prescriptions for some generic drugs. After Bank of America, the largest branch network in the U.S. belongs to
Wachovia Corp., also based in Charlotte, which has 3,400 locations in 21 states.


Besides the revenue it will lose on free buy and sell orders, Bank of America is risking embarrassment if it can't
process the additional volume smoothly. Bank officials say they have been planning for the changes for 18
months, stressing that Bank of America learned its lessons from botched computer-system conversions following
some bank takeovers. This year's integration of credit-card issuer MBNA Corp. has generally won high marks, and
Bank of America recently streamlined its online operations so that customers need only one user name and
password to access all their bank and brokerage accounts.

Brian Moynihan, president of Bank of America's wealth-and investment-management unit, says online trading will
continue to generate "the lion's share" of overall business at the brokerage unit. The bank's Premier Banking &
Investment unit, which includes the brokerage arm, brought in just 4.6%, or $254 million, of Bank of America's
second-quarter profit of $5.48 billion.

The typical online stock-trading customer at Schwab, TD Ameritrade Holding Corp., Omaha, Neb., and E*Trade
Financial Corp., New York, makes about 2.5 transactions per quarter, according to Richard H. Repetto, an analyst
at Sandler O'Neill & Partners LP. Bank of America says its research shows 52 million U.S. households have at least
$25,000 in assets to invest. About 26.5 million households own stock, not counting what is in their 401(k)s and
other retirement plans.

Bank of America's gamble is similar to its 2002 move to eliminate online-banking fees. At the time, the bank was
charging $5.95 a month, but projected that killing the fee could entice more customers to pay bills, check balances
and transfer funds online, bolstering loyalty and account growth. Other banks followed, and free online bill
payment now is the industry standard. Bank of America has 20 million online banking customers and half of the U.S. bill-pay market.
In its online-trading operation, Bank of America charged $19.95 per trade until December, when it lowered trading
commissions to $5, $7 or $10, depending on deposit balance and the number and type of accounts a customer had
at the bank. Bank of America did little advertising, but account and balance levels spiked, surpassing the bank's
previous forecasts "by multiples," Mr. Moynihan says.

Trading Down


Bank of America is offering up to 30 free online stock trades per month to
customers with at least $25,000 in combined deposits:


--Those in the Northeast will be the first to get free trades.


--By February, other Bank of America customers will also qualify for the
trades.


--The bank hopes to use this as a reward to attract more business from its
existing customers.


--This continues the trend toward low-cost online trades at many discount
brokerages.