NEW YORK The rally that carried Wall Street to new highs this year may also propel the brokerage industry into a period of takeovers and consolidation.

Stock trading surged the past few months as investors piled into the advance that lifted the Dow Jones industrials and Standard & Poor’s 500 index to new highs. But that meant competition among brokerages increased as well, raising concerns that the companies will need to slash prices to attract and retain customers.

The trend is already under way. Bank of America Corp. is offering free trades to customers who meet deposit requirements. Analysts believe this model, which might be duplicated by others, is putting massive pressure on the industry.

Bigger firms like Merrill Lynch & Co. and Morgan Stanley can weather market fluctuations because of their scale and diversified businesses. More vulnerable are the boutique firms and electronic brokerages, whose profits often hinge on trading – and the jump in competition is likely causing some to consider deal-making as a means to survive.

“The industry goes through waves of consolidation, and the driving factor tends to be big profits or lack of profits,” said Richard Bove, an analyst with Punk Ziegler & Co. “What is creating less and less profit for brokers outside of New York City is the price of the products they’re selling are dropping dramatically.”