Merrill Lynch, the US financial giant, and Europe's HSBC Holdings PLC have started to offer online share trading in Australia, a key testing-ground for their planned global Internet bank. Merrill Lynch HSBC Australia Pty Ltd follows the launch of share trading in Canada recently. The 50:50 joint venture between Merrill and HSBC is trying to set itself apart in Australia's intensely competitive online market by offering investors the research it sells to fund managers.
Competitors already in the online broking arena do not seem too perturbed by its arrival. Ian Struthers, managing director of TD Waterhouse Investor Services, commented: 'We're glad to see they're more expensive than we are, which means we give better value to our customers for all the products we offer at a considerably lower price.'
In fact, the HSBC-Merrill venture will charge A$29.95 (US$16.28) a trade, even though a price war this year cut online trading fees in half to as low as A$15. There are more than a dozen online brokers in Australia already, including Charles Schwab, which last month set up shop offering trades at A$30 each.
Scott Walters, chief executive of Merrill-HSBC, said its clients will be willing to pay more for its services than for the cheaper offerings of its rivals: 'They are K-Mart kind of offerings', he said of rival brokers. 'No other online broker can offer the same quality online research that we're providing from Merrill Lynch and HSBC.'
Merrill-HSBC plan to open five walk-in investment centres in Australia in the next 12 months. It already has 20,000 clients through the existing HSBC direct investor website.
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