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ECONOMIC REVIEW
Norinchukin Research Institute
Vol. 9 No. 4
April 2000
Summary
Since stock brokerage commissions were liberalized in October
1999, online securities transactions have been growing rapidly in
Japan. The spread of the Internet has raised individual investors to
the same level as institutional investors, but securities companies
must determine how to give individual investors valuable advice
that meets each one’s needs. As a result of the liberalization of
brokerage commissions, securities companies are now at a crucial
stage where they must find a way to survive.
Rapidly Growing Online Stock Transactions,
Present and Future
transaction. (At that time, the average brokerage com-
mission quoted by discount brokers was about $55.) In
the United States it is relatively easy to enter the online
securities business because of the clear-cut division of
roles in the securities industry. Companies that special-
ize in back-office jobs have grown rapidly. Existing
discount brokers, too, have begun online trading. New
brokers that specialize in online transactions have also
debuted. According to the latest data, 157 companies
were registered as online stock brokers. For this very
reason, however, the price war ran its course quickly,
and in the second half of 1997 it came to a temporary
halt. At present, there is an oligopoly of the 10 largest
online brokers, together having a 90 percent share of
online stock transactions. Most online stock brokers,
however, are operating at or below the break-even point
because, for one thing, they have to spend extensively on
advertising and publicity to promote their brand images.
Stock brokerage commissions were liberalized in
October 1999, and since then securities transactions via
the Internet have been growing vigorously, with the
participation of not only established domestic securities
companies but also foreign-affiliated firms and new
entrants in the industry. This report will forecast how
Japanese securities companies’ retail business models will
change amid th