In a first for a banking company, Chase Manhattan Corp. has disclosed plans to sell a cut-rate mutual fund investing service like those of some discount brokerages.

The service will allow investors to buy a wide range of mutual funds from several different fund companies without paying sales commissions or transaction fees. A Chase official said the service will be available in the third quarter.

Chase's service will be similar to a no-fee investing program introduced by Charles Schwab Corp. in 1992. Called OneSource, it has become a key to San Francisco-based Schwab's success, a major source of assets for the 27 no-load mutual fund families in it, and the dominant service of its kind.

A handful of discount brokerages have copied the Schwab concept - most notably, mutual fund giant Fidelity Investments, which sells it through a brokerage affiliate.

Chase is the first banking company to say it will follow suit, industry experts said. If the service is marketed well, they added, it could become a powerful sales engine for the New York banking giant, and foreshadow similar efforts by other banks.

"Banks tend to be very peer-conscious," said A. Michael Lipper, president of fund researcher Lipper Analytical Services Inc., Summit, N.J. "If Chase appears to be successful, then I think there's a good chance that others will follow."

Chase's no-load mutual fund service will be sold through a new discount brokerage that Chase plans to open later this year .

With the discount broker, investors will deal by telephone with brokers or automated voice response systems in a Chase service center in Rochester, N.Y. The discount brokerage will complement the 140 full-service brokers who staff Chase's branches.

Chase is not the only banking company to operate a discount brokerage. Indeed, the operations are common among banks.

But Mary McAvity, a consultant with Cerulli Associates, Boston, said banks and most brokers have avoided offering the kind of no-fee mutual fund service Chase is planning because it is difficult to run and expensive to start. Sophisticated computer systems must be used to batch-up mutual fund trades and then send them to mutual fund companies for settlement, and to track customer accounts and dividends.

Ms. McAvity added that this has cost banks and brokerage firms access to a potentially lucrative sales venue. Mr. Lipper said no-fee services account for up to a quarter of the sales of some of the most popular no- load mutual funds.

Last year, just over a third of all mutual fund sales were of no-load funds, according to the Investment Company Institute, Washington.

Operators of no-fee services have the potential to make a bundle by collecting a slice of the fund companies' management fees, and funneling cash balances into their money market mutual funds, experts said.

"It seems to be a natural for customers," added Salvatore M. Capizzi, investment products executive for New York-based Chase.

Mr. Capizzi declined to say how much money Chase hopes to make from the service. Nor would he say which no-load mutual funds Chase will sell, explaining that agreements are still under negotiation.

But one notable group of funds that will be excluded are the long-term portfolios of Chase's Vista family. Mr. Capizzi said this is because the funds charge sales loads.

To operate the no-fee program, Chase is relying on a new settlement service from BHC Securites Inc.

This Philadelphia-based trade clearing firm specializes in bank brokerages. It counts about 40 banking companies as clients, including PNC Bank Corp., Citicorp, NBD Bancorp, Norwest Corp., and SunTrust Banks Inc.

Mr. Capizzi said he wouldn't be surprised if some of BHC's other bank clients also take advantage of the new settlement service to launch a no- fee mutual fund program. Walter R. Knorr, a BHC senior vice president, said many of the firm's clients have discussed doing so or else starting similar services called mutual fund wrap accounts. He declined to name the clients.

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