• by Judy Warner , December 5, 2006

Despite expectations to the contrary, Banc of America Investment Services' plans to accelerate the rollout of free online equity trading has done little to roil the industry.

When the Bank of America arm announced on Oct. 11 it would allow investors with a minimum $25,000 deposit to make up to 30 free online equity trades a month, shares of discount brokerages Charles Schwab Corp., TD Ameritrade Holding Corp. and E*Trade Financial all dipped.

New York-based E*Trade lost $918 million in market value, but its shares have since recovered from the 8.8 percent drop.

"There absolutely won't be any response from our side to Bank of America," said R. Jarrett Lilien, E*Trade's chief operating officer, at an investors' conference in New York. "We¹re going to watch it because...anything that has that kind of impact on your market cap, you better be responsible about."

Saying it is encouraged by consumer response, BofA has stepped up its free trades offer, and will make it available to customers nationwide early next year.

Still, a recent report on zero-commission trading from The Tower Group in Needham, Mass. points out no such plans have succeeded to date. More than a year ago, Ameritrade closed its Freetrade.com operation and fully intends to stay the course, even in light of recent activities by BAI and Zecco.com, an Internet startup that offers free online equity trades with a $2,500 minimum deposit.

Like E*Trade, Schwab and Ameritrade also intend to hold the line on pricing.

In an email, Charles Schwab of Charles Schwab said: "Knowing there is no free lunch, consumers look carefully at the whole picture--rates on their cash, trading costs, quality of services and investment advice, etc. We always evaluate pricing to remain competitive, but we believe we offer the best combination of value, service and investment help available and we don't have any plans to change our pricing at this time."

"We're really comfortable with where we are," said Ameritrade spokesperson Kim Hillyer, noting that "0 dollar commissions historically haven't resulted in market share growth." Ameritrade routinely entices new customers with its promise of $9.99 online stock trades. For new customers with deposits upwards of $25,000, it offers free trades for 45 days and a $100 cash bonus.

While BofA says it's premature to share actual numbers, the offer is intended to encourage customers to make BofA their lead financial services provider, accessing banking services through Bank of America and self-directed brokerage services through BAI.