Discount brokerages are being snapped up faster than leftover bagels in the employee lunchroom. Both Mellon Bank and Fleet Financial Services recently picked up their respective firms, though for markedly different reasons.

Mellon makes no bones about the strategy behind its acquisition of Pacific Brokerage Services, an on-line discount brokerage firm that captures about three percent of the Internet trading market. "It would probably take us two to three years and a significant investment in technology to create the same systems environment that Pacific Brokerage Services currently has on the Internet," says Lawrence Cash, vice chairman of Mellon's Dreyfus Corp. "While there is a very active market and a growing market...it will probably be saturated and consolidated within the next three years. By the time we (would have had) our systems environment up and running, we probably would have missed the opportunity."

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