The Investment Industry :: essays research papers

The Investment IndustryThe enthronisation manufacturing is composed of a all-embracing variety of firms. Themain players include independent full line securities firm firms, investment banksubsidiaries of chartered banks, and synthesis brokers. Independent full line brokerage firm firms offer a wide range of services, including underwriting, tradingof stocks, advice and seek. In essence, the full service brokeragesubsidiaries of chartered banks offer the same services, however, banksbrokerage firms may dedicate a larger pre-established clientele. Finally, thediscount brokers are basic stock brokers that perform trades for clients who donot want investment advice. Usually, this service is targeted toward thesophisticated investor who does his/her own research to incur minimal commissionfees.Banks entered the investment perseverance in 1987, whereby they took overfull-service brokerages, introduced mutual funds to the banking industry andbecame part of discount brokering. From this time on, chartered banks impartexpanded their dominance in the industry by acquiring key players in theindustry or branching off into full brokerage services. For example, thebrokerage firms for CIBC, Royal Bank, Toronto Dominion Bank, Bank of Nova Scotiaand Bank of Montreal are Wood Gundy, RBC Dominion, Evergreen, Scotia McLeod andNesbitt Burns respectively. In addition, the aforementioned chartered banks havealso branched into the discount brokerage sector.As of December 1994, the Securities Industry as a whole included 158firms, directly employs over 24,000 people, has operating revenue of $5.1Billion and operating gain ground of $1.2 Billion (Appendix A). Within this industrythe largest firms ranked by revenue are RBC Dominion Securities ($1 Billion),Midland Walwyn ($480 million), Burns Fry ($416 million) and Nesbitt Thomson($335 million) (Appendix B). It is evident that the industry is highlyconcentrated in a small number of companies. The top 4 leaders in the industryac counted for 44% of revenue, while the top 8 was 51%.Industry information from 1993 displays further segregation, betweenretail, institutional and integrated firms. Integrated retail-institutionalizedfirms (RBC Dominion Securities, Scotia McLeod, Nesbitt Thomson, Wood Gundy) madeup 66% of the industrys revenue, while purely institutional firms (FirstMarathon Securities, Gordon Capital Corp. and Loewer Ondaatje McCutcheon Ltd.)made up 21% and Retail firms (Green Line Investor Services Inc.), 15% (AppendixC). The following analysis will outline the investment dealers industry,specifically the life cycle, critical success factor, strengths, weaknesses,target markets and profitability.Life CycleThe demand for investment financial services is expanding. This becomesevident by examining the average amplify in revenue which has occurred over the1990-1994, 5 year span. This amounts to a 114% increase in revenue, ($2.4Billion and $5.13 Billion), (Appendix A). An additional indication of gro wth inthe investment industry is the fact that the number of firms in the industry has