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| Three Key Points towards the Future |
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Point 1
Can Investment Banking Operations Be Enriched? |
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The securities industry is groping for survival strategies in order to deal with the major trends of liberalization and globalization. Like leading banks, major securities companies are establishing holding companies and reinforcing their established retail field on the one hand, while also strengthening their investment banking operations.
In the case of the United States, securities companies took various measures after the liberalization of trading commissions, which included focusing on investment banking, specializing in retail, striving to enrich research functions, and so on. Japanese securities companies are taking similar measures.
In retail, major securities companies have worked to reinforce online transactions as an addition to the traditional method of sales through sales personnel. At the same time, they made efforts to upgrade investment trust operations as well as expand customer's asset management through discretionary accounts in which sales and purchases are entrusted upon them by investors.
In addition to the reinforcement of the retail field, there is a pressing need for major securities companies to upgrade their investment banking operations. Japanese securities companies have fallen far behind Western investment banks in this field. In particular, there is insufficient competency in the development of derivative products as well as not enough accumulation of know-how in the field of M&As. It is essential that major securities companies in Japan strengthen their investment banking division if they are to lead the global market and establish an international position for themselves as general securities firms. |
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Point 2
Can Mid- and Small-sized Securities Companies Survive? |
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| Meanwhile, mid- and small-sized securities companies are taking a strategy that differs from major securities firms. That is, they are focusing on specific fields. Internet-based securities firms are making thorough cutbacks in manpower and aiming to secure an operational base by providing customer investors with investment information and various investment tools. Internet-based securities transactions will undoubtedly replace the buying and selling of shares through sales personnel in the long-term. Other than Internet-based securities, there are also small- and medium-sized securities companies that are trying to survive by strengthening their dealing functions or by specializing in particular products such as Chinese stocks. |
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The current market center of Tokyo Stock Exchange |
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Point 3
How Much Growth Can Bank-affiliated Securities Companies Achieve? |
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| Another major movement is market entry by bank-affiliated securities companies. As mentioned earlier, banks entered the securities business by establishing subsidiaries. At the same time, banks are rapidly picking up know-how related to securities operations by acquiring existing securities companies and bringing them under their umbrella. It is easy for bank-affiliated securities companies to access corporate customers since their parent companies are banks. Furthermore, they have an edge in the underwriting of stocks and corporate bonds, and in the future, it will become possible for banks to conduct stock transactions over the bank counter. For these reasons, bank-affiliated securities companies can be said to possess innate possibilities for major growth. Sales of investment trusts are already conducted at bank counters, and with the trust that consumer have towards banks as a weapon, they are steadily increasing their sales share. It is fully expectable that the same kind of situation will arise in the case of the buying and selling of stocks. |
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