The deal affects only those accounts that invest exclusively online without the benefit of a financial advisor. Morgan Stanley's clients who work with the firm's nearly 14,000 advisors in more than 500 branch offices nationwide are not affected. The firm says it will continue to offer those clients a full suite of online services.

"Our clients tell us the customised advice and personal service they receive from their financial advisors help them navigate the complexities of the market, and that's where we are focusing our resources," says John Schaefer, president of Morgan Stanley Individual Investor Group.

The new accounts brings Harrisdirect's direct investing base to over 700,000 active accounts. Bank of Montreal's combined US and Canadian direct investing businesses will now have approximately one million active accounts and about $38 billion in assets under administration. Based on accounts, Bank of Montreal's direct investing business now represents the sixth largest in North America.

Harrisdirect's trading platform offers clients a broad range of investment options and access to several leading, independent sources of market research. Clients can receive a personalised service by telephone, online or in person at over 20 investment centres nationwide.

The newly acquired clients will also have access to the bank's full suite of wealth management solutions, including full-service investing, private banking, and a family of proprietary mutual funds.

Tony Comper, chairman and CEO, Bank of Montreal, says: "Our growth strategy is to expand selectively and substantially in the US, while continuing to invest in our core Canadian franchise. The clients are an excellent strategic fit with Bank of Montreal's direct investing business and the bank's integrated approach to wealth management."

The acquisition is the eighth by Bank of Montreal in the US in just over two years. In November 2001, the bank acquired Credit Suisse First Boston's CSFBdirect online brokerage for $520 million.