- ID: 1052355
- September 2015
- Region: United States
- 10 pages
- First Research
Brief Excerpt from Industry Overview Chapter:
Companies in this industry broker deals for buyers and sellers of securities. Major companies include Charles Schwab, Edward Jones, INTL FCStone, and brokerage units of Citigroup and Wells Fargo (all based in the US), as well as Credit Suisse (Switzerland), Deutsche Bank (Germany), Macquarie Group (Australia), and Nomura (Japan).
Many investors like to spread their risk through buying and selling in various stock markets in different countries. Major global financial hubs include the UK, US, Hong Kong, and Singapore. Many large US-based brokers, particularly those affiliated with major banks and financial services companies, operate internationally.
The securities brokerage industry in the US includes more than 4,000 companies with combined annual revenue of about $120 billion (versus a pre-crash high of about $160 billion). The securities industry is undergoing major consolidation: since 2000, the number of brokerage firms in the US has fallen by about 25%.
Demand is driven by the returns on securities relative to alternative investments. The profitability of individual companies depends on efficient operations and good marketing. Large companies have economies of scale in operations and high name recognition. Small companies can compete effectively by offering better customer service. The US industry is highly concentrated: the top eight companies account for 50% of industry revenue. Indeed, five firms -- Merrill Lynch, Morgan Stanley, Wells Fargo, UBS, and Edward Jones -- dominate the business in the US.
The traditional brokerage industry that sold stocks to individual investors...
Quarterly Industry Update
Call Preparation Questions
Web Links and Acronyms