Bank of America Merrill Lynch expects to launch a new online brokerage service on Monday to attract less affluent investors who trade through discount firms like Charles Schwab or E*Trade, a bank spokeswoman said on Thursday.

The service, called Merrill Edge, will court clients with $250,000 or less in investable assets and place it in direct competition with other online discount brokerages like TD Ameritrade and E*Trade Financial Corp.

Roughly 500,000 existing Bank of America online brokerage clients will be transferred to the new service throughout the summer.

Merrill Edge combines the bank's legacy online brokerage operations, Quick & Reilly, and Merrill's Internet and call-center platform. Charlotte, North Carolina-based Bank of America acquired Merrill Lynch in 2009.

Merrill Lynch's wealth operations typically work with accounts with more than $250,000 of liquid assets and sometimes those with several million dollars, primarily through its 15,000-member brokerage force.

When Bank of America acquired Merrill Lynch in 2009, it wound up with two online brokerage businesses: its own from Quick & Reilly, which was folded into Bank of America Investments in 2004, and Merrill Lynch's internet and call-center platform.

The new Merrill Edge combines those two businesses under a new platform that wealth management chief Sallie Krawcheck said is a priority for the merged companies.

Reuters first reported Bank of America's online brokerage plans following a February interview.

At the time, Krawcheck told Reuters the service targeted Merrill clients who may like to trade play money at one of the online brokers.

Merrill Edge also will target the next generation (of investors) who are feeling pretty hurt by the downturn, she said.

(Reporting by Joe Rauch)