In a move that may signal it is finally ready to take the plunge into the
online trading arena, Merrill Lynch &
Co. Friday acquired the online brokerage technology subsidiary of D.E. Shaw.
Merrill declined to disclose financial terms of the transaction, but The
Wall Street Journal, citing a company source, valued it at between
$25-$35 million. D.E. Shaw Financial Technology (DESoFT) is the subsidiary of Cambridge, Mass.-based security
firm D.E. Shaw & Co., L.P. The
agreement is slated to be finalized by the end of the first quarter.
Merrill did not say it plans to employ DESoFT resources in
creating an online trading venue. The company said only that the technology will be used to expand Merrill Lynch Online, the company’s Internet service
that offers a direct connection to Merrill Lynch.
Merrill clients are not able to trade stocks online, but can access
account information, view statements, transfer funds between accounts, pay
bills, read company research, check stock and mutual fund prices, chart
securities, receive e-mail on topics of interest, monitor Dow Jones Online news and shop at Merrill Lynch’s eCommerce Merchant Center.
Merrill did say that it will rollout client-order entry for securities and
mutual funds for Merrill’s Financial Advantage
and Asset Power clients within the next several weeks.
Merrill claims it has 400,000 clients with household assets of $320 billion.
The company has reportedly stalled its online trading initiatives for the
past two years due to internal squabbling over how to offer online
services without alienating its traditional clients. Merrill
has previously indicated that it will not go toe-to-toe against popular
online brokers, but instead offer online services at comparable rates to its offline services.
“The acquisition underscores Merrill Lynch’s commitment to
providing our clients with a total financial relationship,” said Vice Chairman John L. Steffens, head of Merrill’s private client
“We are delighted that the combined technology talent of DESoFT and Merrill
Lynch will be working
together to define the future of financial services on the Internet and
enable clients to take full advantage of
the rapid innovations now taking place. The combination of a premier
Internet site, a full spectrum of
products and services and the unmatched guidance of our financial
consultants is the ultimate marriage
of technology and human wisdom,” Steffens said.
In a related announcement Friday, Merrill said that because of the success
of its free research trial offering Ask
Merrill, a second version will be launched March 1. Trials for the new
version should be completed by the end of this month, the company said.