For Bank of America customers, the cheap ticket to the stock market is now only $25,000 away.That’s how much users will need to have in their BoA accounts in order to use the new service, free online equity trading.
Announced Wednesday, the move lifts Bank of America into a marketplace that’s rife with competition from both ends. Competition and cash, that is.
Longstanding player E*Trade has enjoyed substantial gains in revenue, jumping from a net loss of $186 million in 2002 to $430 million worth of income in 2005.The company currently makes a substantial chunk of its total net revenues from interest income—in years prior, trading commissions ruled the day.
Sam Waterston might rule the courtroom, but his advertisements for Ameritrade haven’t pushed the company over E*Trade.Ameritrade has nevertheless shown growth, jumping from a near-$29 million loss in 2002 to over $339 million in profits for 2005.Of the company’s $1 billion in 2005 revenues, commissions and clearing fees have typically been Ameritrade’s bread and butter.However, interest revenue finally surpassed the company’s revenue from commission fees in 2005.
On the other end of the spectrum, the Monday launch of startup Zecco.com offers consumers additional access to commission-free stock trading (incidentally, Zecco claims that Bank of America’s free trading program is a direct response to their launch). Zecco’s taken some flack from market analysts, who believe the company’s sheer newness stifles its ability to pull business from experienced traders and their established paths to the stock market.
Still, Zecco only requires a $2,500 balance to open an account, which gives users access to 40 free trades per month.Following that, each individual trade costs $3.50.In contrast, Bank of America only gives users 30 free monthly trades. After that, the commission fees range from $5-$10 per trade.
According to research from the Pew Internet & American Life Project, 63 million American adults bank online, representing 43% of all internet users.Breaking the number down further, 20% of all online men trade stocks, bonds or funds, compared to 6% of women.
Contact the writer:DMurphy@redherring.com
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