Communications Inc. to support its push into on-line trading.

Merrill announced its plans on Monday, as word of Morgan Stanley Dean Witter's plan to offer on-line brokerage services began to appear in the press.

On Wednesday, Morgan Stanley confirmed its intentions to fold its Discover Brokerage on-line trading subsidiary into its full-service operations.

Morgan Stanley intends to beat Merrill to the punch by making self-directed on-line trading available today.

"Starting tomorrow, every Morgan Stanley Dean Witter client will have the choice of self-directed investing on-line, a traditional full-service relationship through a financial adviser or some combination of both," said Philip J. Purcell, chairman and chief executive officer of Morgan Stanley Dean Witter, in a press conference Wednesday.

Merrill, the largest brokerage house in the United States, with client assets exceeding $1.5 million, made waves in June when it said it would make discount on-line trading available by December.

Mr. Purcell said Morgan Stanley Dean Witter arrived at a strong consensus more than a year ago that it should get into on-line trading. It has been working on its on-line offering, called ichoice, for months.

Merrill has hired Exodus, of Santa Clara, Calif., to host, design, and manage the servers to support its on-line offerings. Merrill also expanded a contract with AT&T Solutions to integrate the host site with the financial firm's global communications network, which is already managed by the AT&T networking subsidiary.

By working with Exodus, Merrill will be able "to focus on aggressively developing our platform without worrying about the reliability of our Internet platform," said John McKinley, senior vice president and chief technology officer at Merrill.

Exodus' experience and AT&T Solutions' networking skills give Merrill "significant advantages," he said.

Exodus' other clients include Bank of America Corp., Charles Schwab, and Salomon Smith Barney, a unit of Citigroup Inc.

The entry of Merrill and Morgan Stanley Dean Witter into on-line trading spells more competition for "pure" on-line brokerages such as E-Trade Group and DLJdirect, as these on-line firms work to broaden their own services.

As traditional brokerages combine full-service offerings with access to on-line trading, the lines between on-line and off-line brokerages are blurring.

"The whole on-line distinction is going away very soon," said Greg Smith, a research analyst at Hambrecht & Quist in San Francisco.

Merrill Lynch Direct, the firm's self-directed on-line trading service, will cost $29.95 a trade.

Merrill Lynch is already offering another option, called Unlimited Advantage, which provides unlimited on-line trading, consultations with Merrill Lynch brokers, and other services for an annual fee based on client assets that starts at $1,500.

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