Merrill Edge has joined the zero-commission price wars that have entangled the online brokerage industry since late September. That's when Interactive Brokers launched its IBKR Lite product. Charles Schwab, TD Ameritrade, E*TRADE, and Ally Invest all cut equity commissions to zero the week of October 1st, and TradeStation announced its TSgo free trading offering as well. Fidelity joined the fray on October 10th.
Merrill Edge has offered free trades to certain customers for over a decade, most recently expanding free stock and exchange-traded fund (ETF) trades to customers with at least $20,000 in qualifying accounts at the brokerage and its parent bank. Immediately prior to this announcement, Merrill says that approximately 87% of all transactions had been commission-free. This move extends free trades for equities and ETFs, including penny stocks, and cuts the per-leg options commissions to zero as well, effective October 21. The per-contract options commission is now $0.65, a cut from $0.75, in line with the fees charged by Schwab, E*TRADE, Fidelity, and TD Ameritrade.
There are no fees to join or participate in Merrill and Bank of America's Preferred Rewards program. You'll need an eligible Bank of America personal checking account and 3-month average combined balances of $20,000 or more in qualifying Bank of America banking accounts and/or Merrill investment accounts. You have to sign in to your online banking site or mobile app to join the program, so keep in mind that you don't automatically qualify.
For those clients who are not enrolled in Bank of America's Preferred Rewards, base commissions have been cut from $6.95 to $2.95.
Big Change for Options Traders
The major change for Merrill Edge clients is the elimination of the base per-leg charges for options commissions, which were never part of their earlier free trade promotions. David Poole, Consumer Investments Solutions and Client Services Executive with Bank of America says, "I think this will encourage our clients to try options trading. We wanted to enhance the program, and offering free options trades was an area we could focus on."
Merrill partners with OptionsPlay, an options analysis suite for investors and traders, into its Pro platform, and is working to extend that functionality to its website. Poole says that adding options analysis and education to their offerings will encourage new trading activity by Merrill's customers and that eliminating the per-leg fee and cutting the per-contract fee will also be encouraging. "We're very happy with our OptionsPlay partnership," says Poole.
With the elimination of base options fees, Poole expects that more than 90% of all transactions will be commission-free by the end of the year.