National Financial Services Corp. is poised to handle all the clearing responsibilities for the newly expanded BankAmerica Corp.
National Financial, a unit of Fidelity Management and Research, Boston, will take over custody, record keeping, trade execution, and the safekeeping of securities for BankAmerica's retail brokerage operations in July, said Joe Kelly, senior vice president at Fidelity.
The clearing firm already handles those duties for the former NationsBank Corp., which merged with BankAmerica in September. It assumed a portion of the clearing services for NationsBank two years ago, and added the bank's full-service brokerage business in October, when Morgan Stanley Dean Witter & Co.'s contract expired.
"Nations has been an account that we've wanted for quite some time," Mr. Kelly said. The BankAmerica deal "adds to the relationship."
The conversion of BankAmerica's clearing service to National Financial will coincide with the merger of the two banks' brokerages. The change would provide them with a uniform system with features such as consolidated statements for checking and investment accounts that will be available on- line.
The new BankAmerica Corp., which is headquartered in Charlotte, N.C., would be the biggest customer of National Financial, one of the biggest players in the unglamorous but vital business of providing record keeping for investors.
As big clearing firms like National Financial win large accounts like BankAmerica's, it will be harder and harder for smaller rivals to compete, said John Payne, a consultant at Cerulli Associates, a research and consulting firm in Boston.
The sheer scale of the market leaders would give them competitive advantages in areas like technology-for example by using the Internet, as National Financial is doing with BankAmerica.
"Technology is a major driver here," Mr. Payne said. "Smaller firms are going to have difficulty keeping up."
The top 10 clearing firms already control 50% of the market, which consists of about 6,000 brokerages, according to Cerulli. In all, there are 185 clearing firms competing for that business.
Cerulli said it expects the number of brokerage accounts to rise by 11%, to 115 million, by the end of the year.
The clearing services conversion is one of the key steps in BankAmerica's effort to unify the BankAmerica and NationsBank retail investment programs.
Early this year the bank's full-service brokerage units adopted a unified list of mutual fund providers. The combined brokerages are expected to report to Henry Rose, who now runs the NationsBank side.