Magazine article American Banker

Merrill Lynch Buying Internet Savvy but Says It Won't Go Discount Route

Magazine article American Banker

Merrill Lynch Buying Internet Savvy but Says It Won't Go Discount Route

Article excerpt

Merrill Lynch & Co. said Friday that it will use a technology arm of D.E. Shaw & Co. to build up its Internet presence.

Merrill's acquisition of D.E. Shaw Financial Technology LP, part of a technologically savvy New York investment company that was hurt by recent downturns on international markets, provides a belated boost into the hot Internet trading market.

About one out of every seven equity trades are conducted over the Internet, according to data compiled by Credit Suisse First Boston analyst Bill Burnham, and the on-line market share leaders are Charles Schwab & Co., Toronto-Dominion Bank's Waterhouse Securities affiliate, and E-Trade Group.

"Merrill Lynch wants to go into this market and fight for what it considers to be its customers," said electronic commerce analyst Scott Smith of Current Analysis in Sterling, Va. Merrill is realizing that online brokerage is more than "just a fad," he added.

D.E. Shaw Financial Technology, which is based in Cambridge, Mass., and calls itself DESoft, would bring advanced on-line trading software to the largest retail brokerage firm. The deal, which the companies hope to conclude this quarter pending regulatory approval, is not expected to change Merrill's Internet pricing or full-service product strategy.

"We have no intention of being in the deep discount on-line trading business," said Maddy Weinstein, senior vice president in Merrill Lynch's private banking group.

Merrill will target "people who are interested in managing a portion of their money on their own. …

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