Securities Brokering in The US Industry Market Research Report from IBISWorld Has Been Updated
(PRWEB) July 09, 2013 -- The Securities Brokering in the US industry struggled during the five years to 2013 due to financial market volatility, technology-driven changes in financial markets and new regulations. In response, industry firms consolidated and became increasingly indistinguishable from the Financial Planning and Advice industry (IBISWorld report 52393). From 2008 to 2013, industry revenue rebounded at an average annual rate of 6.8% from a recessionary low of $77.3 billion in 2008 to an estimated $107.3 billion in 2013; however, industry revenue still remains well below its prerecessionary high of $179.5 billion in 2006, and this growth hides the industry's volatile year-to-year performance. Industry revenue declined 56.0% in 2008 as the financial sector stood on the brink of collapse, only to rebound 64.3% in 2009 due to unprecedented government intervention and spending. "However, a slow economic and financial market recovery and contracting trade volumes caused revenue to decline through 2012," says IBISWorld industry analyst Doug Kelly. In 2013, declining uncertainty levels and improvements in household wealth and finances and corporate profit will help drive up trading volumes and return the industry to growth; revenue is expected to grow 1.2% in 2013 on increases in client assets and higher securities trading volumes. The average industry profit margin also remained under pressure due to technology-driven declines in trade commissions as a result of intense competition and the disintermediation of trades, increased technology infrastructure costs and pricing pressure caused by high competition. The industry remains profitable, however.
Firms in the Securities Brokering in the US industry have responded to falling profitability by increasing their financial services offerings and transitioning to an asset-based fee model characteristic of the financial advisory industry. IBISWorld estimates that the industry will rebound over the five years. "Recent merger and acquisition activity will cause firms to capitalize on operational synergies, larger client bases and new financial advisory business segments," says Kelly. The future profitability of firms will vary widely based on the mix of financial services that firms branch into, their ability to adapt to technological change and the success of future M&A activity.
The Securities Brokering industry has a medium level of concentration and is becoming increasingly concentrated. Information technology improvements continue to provide economies of scale in the delivery of services. At the same time, brokerage services are increasingly becoming just one of a range of financial services delivered to institutional and retail clients. The convergence of securities brokerages and financial services within large commercial and investment banks and large asset management firms will increase industry concentration by creating larger industry players offering more services than discount brokerage firms.
Activities include proprietary trading, asset management, financial planning and banking services, all of which may contribute significantly to a brokerage firm's revenue. It is estimated that the market share of the top four brokers in this industry has remained stable in 2013, declining slightly due to shaken investor confidence in major industry brokerage firms relative to discount brokerage firms during the recession that has since rebounded. The growth in retail brokerage has largely been captured by discount and online brokers who offer lower fees than the top four brokerage firms, but have had to consolidate to compete with full-service brokers.
The raft of mergers and acquisitions arising from the subprime mortgage crisis will increase concentration during the next few years as discount brokerage firms seek to expand their service offerings to complete with consolidated full-service brokerage firms. Major players in this industry include Bank of America Corporation, Wells Fargo & Company, Morgan Stanley and J.P. Morgan Chase & Co.
For more information, visit IBISWorld’s Securities Brokering in the US industry report page.
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IBISWorld industry Report Key Topics
This industry comprises firms that execute securities buyers' orders by acting as agents that arrange transactions between securities buyers and sellers on a commission or transaction-fee basis. During the past decade, this industry has continued to converge with various other securities and banking industries due to regulatory, technology and market trends; however, this report excludes investment banking, securities dealing and commercial banking activities.
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About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
Gavin Smith, IBISWorld Inc., http://www.ibisworld.com, 310-866-5042, [email protected]
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