Merrill Lynch & Co. has been pitching a new version of its cash management product as a major step forward in its long campaign to enter consumer banks' territory.

But many of Merrill's competitors have already traveled down the same path.

Hilliard-Lyons Inc., Prudential Securities Inc., Raymond James Financial Inc., Morgan Stanley Dean Witter & Co., the Salomon Smith Barney unit of Citigroup Inc., and TD Waterhouse, a unit of Toronto-Dominion Bank, have been active in offering products similar to the one Merrill is planning. And not all of these brokerages have taken advantage of big-bank parents; many offer the services through their thrift affiliates, just as Merrill is doing.

"It's been very successful for us," said Frank Petrilli, president and chief executive of TD Waterhouse, which has offered the accounts since 1994.

Hilliard-Lyons began offering a cash management product that has a FDIC-insured component last year. "As far as we're concerned it's not a revelation. It's something we've been doing for quite some time," said Blaine Aikin, director of product management the brokerage firm, which is owned by PNC Bank Corp. of Pittsburgh.

To be sure, much of the competition pays lower rates than what Merrill plans for its new cash management account, known internally at the firm as CMA 2.0. The brokerage intends to pay about 5 basis points more than the rate on its flagship CMA, which currently yields 5.30%, said James Perilstein, first vice president of client relationship marketing for Merrill.

In contrast, one of Raymond James's two federally insured sweep offerings pays 3.91%.

But Salomon Smith Barney's rates are comparable to Merrill's. Salomon began offering links between its brokerage and FDIC-insured bank accounts in late 1997 - well before its merger with Citicorp in September 1998. These accounts pay a 5.33% annual yield.

Starting in March, excess cash in most of Merrill's new accounts will no longer be swept into taxable money funds. Instead, the firm will automatically sweep the excess cash into an FDIC-insured account at one of two banks it owns. This "effectively will create one of the largest banks in the country almost overnight," Mr. Perilstein said.

Merrill holds some $118 billion of taxable money fund assets in 2 million cash management accounts.

The FDIC-insured product will be available to new customers in June. It will be offered to institutional clients and individual investors, and to 401(k) and trust clients. Customers who do not want to maintain their excess cash in the FDIC-insured account can elect to move it to a money fund, a spokeswoman said.

According to Mr. Perilstein, Merrill's existing federally insured alternative is not widely used. The brokerage currently offers a sweep account with a federally insured option through a consortium of some 20 banks, but yields are in the 3.5% to 4% range, he said.

Still, observers said Merrill, which broke ground two decades ago with the introduction of its cash management account, may prod other brokerage firms to converge more of their banking and brokerage abilities.

Indeed, at a recent conference in New York, Merrill chairman David H. Komansky said the new CMA, and innovations like it, "will provide convenience and value for clients, while lowering our cost of funding and enabling us to offer innovative lending products and services."

Analysts said they anticipate that others will pile in.

"I really expect to see more of these insured and uninsured hybrids going forward," said Peter G. Crane, managing editor of IBC Financial Data's Money Fund Report.

Bradford H. Warner, vice chairman of FleetBoston Financial Corp., who heads its brokerage and money management operations, said FleetBoston is building the linkages to enable brokerage proceeds to be rolled directly into an FDIC-insured account. The option will be available by yearend, he said.

Others, such as PaineWebber Inc. of New York, have applied for a thrift charter and could step up to the plate with similar cash management accounts, observers said.

A spokesman said PaineWebber plans to offer trust services, insured deports, on-line banking, residential mortgages, and commercial loans, among other things, but declined to comment about its intentions with respect to a sweep account with a federally insured option.

Though most of the FDIC-insured sweep accounts have been available for years, the passage of the new financial modernization law will surely contribute to the continued growth of such hybrid products.

"The concept is certainly strong. Any time you can be the adviser of choice by offering a complete range of financial services, you are net ahead," said Mr. Aikin of Hilliard-Lyons.

Amy L. Anderson and Karen Talley contributed to this report.

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