The Investment Industry :: essays research papers

The Investment IndustryThe investing assiduity is make up of a wide variety of firms. Themain players include independent overflowing line securities firm firms, investment banksubsidiaries of chartered banks, and give notice brokers. strong-minded full linebrokerage firms adjure a wide arena of services, including underwriting, tradingof stocks, advice and research. In essence, the full service brokeragesubsidiaries of chartered banks offer the same services, however, banksbrokerage firms may have a larger pre-established clientele. Finally, thediscount brokers are basic stock brokers that perform trades for clients who donot inadequacy investment advice. Usually, this service is targeted toward thesophisticated investor who does his/her own research to incur marginal commissionfees.Banks entered the investment industry in 1987, whereby they took overfull-service brokerages, introduced mutual capital to the banking industry andbecame part of discount brokering. From this time on, chartered banks have grow 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 woodwind instrument Gundy, red blood cell Dominion, Evergreen, Scotia McLeod andNesbitt destroy respectively. In addition, the aforementioned chartered banks havealso ramous 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 $5.1trillion and operating profit 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 industryaccounted for 44% of revenue, while the top 8 was 51%.Industry culture 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 strictly institutional firms (Firstbattle of Marathon Securities, Gordon Capital Corp. and Loewer Ondaatje McCutcheon Ltd.)made up 21% and Retail firms (Green Line Investor serve 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 bring for investment financial services is expanding. This becomesevident by examining the average add in revenue which has occurred over the1990-1994, 5 year span. This amounts to a 114% append in revenue, ($2.4Billion and $5.13 Billion), (Appendix A). An additional in dication of growth inthe investment industry is the fact that the number of firms in the industry has