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Bank of America joins free-trading war among brokerages

Bank of America Corp. announced that its Merrill Edge Self-Directed platform will offer commission-free stock, exchange-traded funds and options trading to clients in all tiers of its Preferred Rewards Program.

The banking giant said Merrill Edge Self-Directed clients not enrolled in the preferred rewards program will now pay a fee of $2.95 per online stock and ETF trade, down from $6.95.

Business models for brokerages have seen disruption with the emergence of startups such as Robinhood Markets Inc., which broke into the spotlight when it offered commission-free trading. Big banks have also joined in the competition, with JPMorgan Chase & Co. launching an e-brokerage offering 100 free stock and ETF trades in a user's first year, after which they will have to pay $2.95 per trade. BofA's Merrill Edge previously offered 30 free trades per month for customers with at least $50,000 in certain accounts.

The pricing war heated up in early October, when Charles Schwab Corp. announced it will eliminate its $4.95 commission rate for U.S. stock, options and ETF online trades. Schwab's plan was swiftly followed with similar cuts by its competitors such as TD Ameritrade Holding Corp., E*TRADE Financial Corp. and Fidelity Investments. Interactive Brokers Group Inc. also has plans for an online free-trading platform.