Three of the country's biggest stockbrokers have raised the commissions they charge individual investors for buying and selling stocks, setting the pattern for widespread increases in brokerage fees.
The latest to boost its fees is Merrill Lynch, Pierce, fenner and Smith, which Friday instituted new rate schedules that will add about 7 per cent to the cost of stock trades for small investors.
Within the past month, rates also have been raised by Drexel Burnham and Co. and the soon to be merged Dean Witter Reynolds Organization.
All the increases vary, depending on the price of the stock traded and the size of the order, averaging 5 to 7 per cent.
Local stock brokers yesterday predicted other stock trading firms likely would follow the pack of industry leaders in boosting prices.
Most of the fee increases were imposed without public announcements or notification of customers, some of whom reportedly learned of the increases when they received statements from their brokers.
Spokesmen for investment houses blamed rising costs of doing business and poor brokerage house profits for the fee hikes.
Stockbrokers have been free to set their own commission charges since May 1, 1975, when fixed commissions were ended by the Securities and Exchange Commission.
Since that time the brokeage fees charged to institutional investors - the brokers' biggest customers - have been discounted by 30 to 40 per cent, but retail rates - charged smaller investors - have not come down.
A Merrill Lynch broker said the increase would add about $4.90 to the commission for buying an order of 100 shares of a stock selling for $40, a $4,000 investment.
Merrill Lynch's maximum fee for odd lot trades will not go up, but most other charges are increased he said.
The local broker said the higher rates "reflect the adverse impact of inflation - all out our costs are going up of everything are going up. It's a fact of life."
As at Merrill Lynch, the Dean Witter Reynolds executive responsible for the increase could not be reached for comment.