LEHMAN BROTHERS APPOINTS JAYANTA BANERJEE AS
HEAD OF PRIVATE EQUITY AND GROWTH CAPITAL, INDIA
MUMBAI, 12 June 2007
Lehman Brothers, the global investment bank, said today Jayanta Banerjee has joined the Firm as managing director and head of Private Equity (excluding Real Estate) and Growth Capital, India. Based in Mumbai, he will report jointly to Tarun Jotwani, chairman and chief executive officer, India, and Christopher Manning, head of the Investment Management Division, Asia.
In his new role, Mr. Banerjee will be responsible for managing Lehman Brothers’ growth capital principal investments and will work closely with members of the various global private equity funds. Having been involved with the Indian private equity industry since 1998 and having been a member of the senior management team at one of India’s largest and most successful private equity firms, Mr. Banerjee brings vast experience and an indepth knowledge across various sectors as an investor.
Mr. Jotwani said, “Lehman Brothers’ India franchise continues its robust expansion and, under Jayanta’s leadership, we expect to capitalize on the tremendous growth in mid-capcorporate India. With corporate profit growth in the mid-twenty percent range, and private equity investments growing at a rate of more than 100% in India, we are very pleased to have someone of Jayanta’s caliber leading this effort for us.”
Mr. Manning added, “We are excited to have someone of Jayanta's talents as we continue to grow our private equity business in India and we look forward to partnering with management teams to help them achieve their growth plans.”
Prior to joining Lehman Brothers, Mr. Banerjee was Director-Investments at ICICI
Venture. In addition to being a member of the Investment Committee of ICICI Venture’s
US$810 million India Advantage Fund Series 2, the largest Indian private equity fund,
Mr. Banerjee played a pivotal role in raising funds from investors across the globe. He is an alumnus of Indian Institute of Management, Bangalore (IIM B) and holds a Bachelor of Engineering from Jadavpur University, Kolkata.
-------------------------
LEHMAN BROTHERS APPOINTS PRASHANT PURKER AS
HEAD OF GLOBAL FINANCE, INDIA
MUMBAI, 30 April, 2007
Lehman Brothers, the global investment bank, today announced the appointment of Prashant Purker as managing director and head of Global Finance, India.
In this new role, Mr. Purker will be responsible for the Firm’s origination efforts across debt, equity and the client-based Risk Solutions Group in India.
Mr. Purker has more than twenty years of business development and managerial experience across a wide range of financial services and products, including foreign exchange, equities, fixed income, asset-backed finance and interest rates, as well as their related derivatives.
Based in Mumbai, Mr. Purker will report to Surojit Shome, head of Investment Banking,
India and Joonkee Hong, head of Global Finance, Asia.
Mr. Shome said: “We are delighted to have someone of Prashant’s caliber join our
Investment Banking franchise. With M&A on the rise and demand for innovative structured financial products increasing, Prashant’s experience will be an invaluable asset to the Firm.”
Mr. Purker joins Lehman Brothers from ICICI Bank Ltd, where he was head of Global
Principal Investments and Trading, responsible for the bank’s Indian proprietary trading business and the investment and trading activities of its overseas branches. Mr Purker is an Indian Institute of Technology (Kanpur) alumnus and has a post-graduate diploma in management from the Indian Institute of Management (Ahmedabad).
-----------------
LEHMAN BROTHERS APPOINTS PANKAJ VAISH AS HEAD OF EQUITIES AND FIXED INCOME LIQUID MARKETS, INDIA
MUMBAI, 23 April 2007
Lehman Brothers, the global investment bank, today announced the appointment of Pankaj Vaish as managing director and head of Equities and Fixed Income Liquid Markets, India. Based in Mumbai, he will report to Tarun Jotwani, chairman and chief executive officer, India and Hyung Lee, head of Equities and Fixed Income, Asia.
Mr. Vaish brings to the Firm vast experience across product lines. He has worked extensively in equity and derivatives trading, structuring and trading structured products. He also brings in-depth knowledge of hedge funds, having previously founded a global macro hedge fund, called PV Capital Management, and has worked with New York-based Vega Asset Management.
Mr. Jotwani said: “It gives me immense pleasure to welcome a professional of Pankaj’s exceptional standing to the Firm, who brings with him over 16 years of capital markets experience. Currently, India is a market with great potential in the capital markets. His leadership and expertise in financial products will be an invaluable asset as the Firm grows in equities, rates and commodities, among other liquid markets products. His appointment highlights Lehman Brothers’ commitment to expanding our businesses in India.”
Mr. Vaish joins Lehman Brothers from Citigroup, New York, where he was most recently managing director, responsible for proprietary trading of Global Equity Markets via cash and derivatives. Earlier he was responsible for the North American Equity Derivatives Trading, Global Commodity Derivatives business and Fixed-Income Derivatives Trading activities at Citibank. He has a Master of Science in Management as well as a Bachelor’s degree in Economics from the Massachusetts Institute of Technology.
-----------------------------
LEHMAN BROTHERS APPOINTS SUROJIT SHOME AS MANAGING DIRECTOR AND HEAD OF INVESTMENT BANKING, INDIA
MUMBAI, 23 January 2007
Lehman Brothers, the global investment bank, today announced the appointment of Surojit Shome as managing director and head of Investment Banking, India, based in Mumbai.
Mr. Shome brings to the Firm a depth of experience in the Indian market covering the corporate banking, capital markets and investment banking product range. He is responsible for building the Firm’s investment banking franchise in that market and reports to Kunho Cho, head of Investment Banking, Asia Pacific, at Lehman Brothers, and Tarun Jotwani, chairman and chief executive officer, India, at Lehman Brothers.
Mr. Shome joins Lehman Brothers from Citigroup, where he was most recently a managing director and head of Corporate Banking for the Indian sub-continent overseeing corporate and financial institutions coverage teams for India, Sri Lanka, Bangladesh and Nepal. He has a bachelors degree in Economics & Statistics from Presidency College, Kolkata and a post-graduate degree in business management from XLRI, Jamshedpur.
Tarun Jotwani, chairman and CEO, India, at Lehman Brothers, said, “I am delighted to have someone of Surojit’s calibre leading our rapidly expanding Indian investment banking franchise.
India is an exciting growth market and Surojit brings 19 years of experience, enormous domain knowledge and great leadership skills to Lehman Brothers. His appointment highlights the Firm’s commitment to expanding our investment banking presence in India.”
Bsed on media release by Lehman
Showing posts with label Stock-broking. Show all posts
Showing posts with label Stock-broking. Show all posts
Tuesday, December 18, 2007
Options Trade Execution Alogorithm Lehman Brothers 2007
LEHMAN BROTHERS PROVIDES OPTIONS LIQUIDITY SEARCH ALGORITHM
NEW YORK, November 29, 2007
Lehman Brothers, the global investment bank, today announced the launch of Options Work and Pounce, a new algorithmic order execution strategy for the U.S. listed options market. The new strategy is an extension of LMX® (Lehman Model
Execution), Lehman Brothers’ market leading global suite of algorithmic order execution strategies, available for both equities and futures.
Frank Troise, managing director and head of U.S. Equities Electronic Trading Products,commented, “Options trading continues to migrate to electronic venues. We are committed to staying on the forefront of electronic trading by constantly expanding our product offering.
Delivery of algorithmic tools that access electronic options liquidity is in direct response to growing client demand for advanced derivatives trading capabilities.”
Options Work and Pounce, which leverages the award-winning LMX platform, is designed to provide price improvement. The algorithm manages orders anonymously on behalf of clients and opportunistically reacts to available liquidity, allowing clients to build or reduce positions while minimizing market impact.
“Providing our clients with innovative electronic execution tools is of paramount importance in today’s markets,” commented Brian Fagen, managing director and head of U.S. Equities Electronic Trading and Program Sales. “We are thrilled to offer these expanded capabilities to our clients.”
With its reliable, high-performing environment, the LMX suite has seen more than 100% volume growth in 2007 over the prior year. The LMX suite of direct access algorithms complements Lehman Brothers' broader offering of electronic trading tools and analytical services. LMX was ranked #1 algorithm for hedge funds by Alpha Magazine in 2007.
Lehman Brothers’ Equities Capital Markets, which reported record net revenues of $4.4 billion in the first nine months of fiscal 2007, is consistently recognized across product lines and continues to demonstrate top-tier market positions, as evidenced by a series of #1 rankings. In 2007, the Firm ranked #1 for the fifth year in a row in Institutional Investor’s All-America Research Team survey, and #1 in Institutional Investor’s U.S. Equity Trading poll. Lehman Brothers was the first broker to execute four million electronic order book trades in one month
on the London Stock Exchange (LSE) and ranked as the #1 dealer by trading volume on LSE,Euronext and Xetra. The Firm also ranks #1 by program trading volumes on the NYSE. In addition, Alpha magazine ranked Lehman Brothers #1 in Algorithmic Trading. Investors ranked the Firm #2 for Overall Equity Derivatives Quality for Europe in 2007, up from #10 in 2005.
The Firm was also named the #1 Prime Broker in Europe and Japan, and was awarded 42 “Best in Class” awards for excellence in the 2007 Global Custodian Prime Brokerage survey.
Source: Media release of the company
NEW YORK, November 29, 2007
Lehman Brothers, the global investment bank, today announced the launch of Options Work and Pounce, a new algorithmic order execution strategy for the U.S. listed options market. The new strategy is an extension of LMX® (Lehman Model
Execution), Lehman Brothers’ market leading global suite of algorithmic order execution strategies, available for both equities and futures.
Frank Troise, managing director and head of U.S. Equities Electronic Trading Products,commented, “Options trading continues to migrate to electronic venues. We are committed to staying on the forefront of electronic trading by constantly expanding our product offering.
Delivery of algorithmic tools that access electronic options liquidity is in direct response to growing client demand for advanced derivatives trading capabilities.”
Options Work and Pounce, which leverages the award-winning LMX platform, is designed to provide price improvement. The algorithm manages orders anonymously on behalf of clients and opportunistically reacts to available liquidity, allowing clients to build or reduce positions while minimizing market impact.
“Providing our clients with innovative electronic execution tools is of paramount importance in today’s markets,” commented Brian Fagen, managing director and head of U.S. Equities Electronic Trading and Program Sales. “We are thrilled to offer these expanded capabilities to our clients.”
With its reliable, high-performing environment, the LMX suite has seen more than 100% volume growth in 2007 over the prior year. The LMX suite of direct access algorithms complements Lehman Brothers' broader offering of electronic trading tools and analytical services. LMX was ranked #1 algorithm for hedge funds by Alpha Magazine in 2007.
Lehman Brothers’ Equities Capital Markets, which reported record net revenues of $4.4 billion in the first nine months of fiscal 2007, is consistently recognized across product lines and continues to demonstrate top-tier market positions, as evidenced by a series of #1 rankings. In 2007, the Firm ranked #1 for the fifth year in a row in Institutional Investor’s All-America Research Team survey, and #1 in Institutional Investor’s U.S. Equity Trading poll. Lehman Brothers was the first broker to execute four million electronic order book trades in one month
on the London Stock Exchange (LSE) and ranked as the #1 dealer by trading volume on LSE,Euronext and Xetra. The Firm also ranks #1 by program trading volumes on the NYSE. In addition, Alpha magazine ranked Lehman Brothers #1 in Algorithmic Trading. Investors ranked the Firm #2 for Overall Equity Derivatives Quality for Europe in 2007, up from #10 in 2005.
The Firm was also named the #1 Prime Broker in Europe and Japan, and was awarded 42 “Best in Class” awards for excellence in the 2007 Global Custodian Prime Brokerage survey.
Source: Media release of the company
Thursday, November 29, 2007
Advertisements by Stock Broking Companies - 2007
--------------------
30 November 2007
In the Mint, page 11 was completely devoted to SMC Global Securities. Half of the page was devoted to a writeup and an interview with Mr. Mahesh Chandra Gupta, VC and MD of SMC. The other half page is the advertisement of SMC
The theme is "1000 locations and still going strong"
Come be a part of India's fastest growing sub-brokers network.
*SMC, has grown from 400 offices to 1000 offices in just 2 years.
*SMC is commanding the faith of over 3,75,000 satisfied investors.
*3rd largest broking house in terms of trading terminals (Source; D&B Study)
*5th largest distributor of IPO in retail (Source: Prime Data Rankings)
*5th largest subbroker network in India (Source D&B Study)
SMC Punchline: Moneywise. Be Wise.
Its merchant banking unit; Nexgen Capitals Ltd. SeBI Regn.No. INM000010999
email info@smcindiaonline.com
www.moneywisebewise.com
---------------------------------
30 November 2007
In the Mint on front page right hand corner, there was an advertisement by Motilal Oswal Financial Services.
The advertising agency could not be traced from the ad.
This is a new ad. I am seeing it for the first time.
The theme of the ad is "Knowledge First"
It says, at Motilal Oswal we always know a little more. That is why we are able to spot trends early and make the most of market opportunities. KNowledge, it is said, has no substitute. Our clients will be the first to agree.
-----------------------
30 November 2007
In the Mint, page 11 was completely devoted to SMC Global Securities. Half of the page was devoted to a writeup and an interview with Mr. Mahesh Chandra Gupta, VC and MD of SMC. The other half page is the advertisement of SMC
The theme is "1000 locations and still going strong"
Come be a part of India's fastest growing sub-brokers network.
*SMC, has grown from 400 offices to 1000 offices in just 2 years.
*SMC is commanding the faith of over 3,75,000 satisfied investors.
*3rd largest broking house in terms of trading terminals (Source; D&B Study)
*5th largest distributor of IPO in retail (Source: Prime Data Rankings)
*5th largest subbroker network in India (Source D&B Study)
SMC Punchline: Moneywise. Be Wise.
Its merchant banking unit; Nexgen Capitals Ltd. SeBI Regn.No. INM000010999
email info@smcindiaonline.com
www.moneywisebewise.com
---------------------------------
30 November 2007
In the Mint on front page right hand corner, there was an advertisement by Motilal Oswal Financial Services.
The advertising agency could not be traced from the ad.
This is a new ad. I am seeing it for the first time.
The theme of the ad is "Knowledge First"
It says, at Motilal Oswal we always know a little more. That is why we are able to spot trends early and make the most of market opportunities. KNowledge, it is said, has no substitute. Our clients will be the first to agree.
-----------------------
Tuesday, November 27, 2007
PriceMetrix- Consultant - Trainer - Retail Brokers
http://www.pricemetrix.com/public/
LEADERSHIP
The Senior Team at PriceMetrix brings a solid blend of experience to the opportunity at hand. Over the past two decades, the team has worked extensively with investments distributors and manufacturers, and has led change management efforts and revenue growth in a number of industries.
September 25, 2007
BMO Nesbitt Burns Takes Investment Advisor Professional Development to a New Level
BMO Nesbitt Burns Rolls Out PriceMetrix Productivity Program to 1,330 Investment Advisors
BMO Nesbitt Burns Inc. today announced a multi-year agreement to deploy the exclusive PriceMetrix Platform and Program across the Firm's network of 1,330 Investment Advisors, in 160 locations across Canada. The PriceMetrix Program empowers Investment Advisors to achieve a greater level of performance and realize opportunities for success.
Head Office Address:
PriceMetrix Inc.
40 University Avenue
Suite 200
Toronto, Ontario
M5J 1T1
Canada
Telephone and Fax:
Tel: (416) 955-0514
Fax: (416) 955-0501
LEADERSHIP
The Senior Team at PriceMetrix brings a solid blend of experience to the opportunity at hand. Over the past two decades, the team has worked extensively with investments distributors and manufacturers, and has led change management efforts and revenue growth in a number of industries.
September 25, 2007
BMO Nesbitt Burns Takes Investment Advisor Professional Development to a New Level
BMO Nesbitt Burns Rolls Out PriceMetrix Productivity Program to 1,330 Investment Advisors
BMO Nesbitt Burns Inc. today announced a multi-year agreement to deploy the exclusive PriceMetrix Platform and Program across the Firm's network of 1,330 Investment Advisors, in 160 locations across Canada. The PriceMetrix Program empowers Investment Advisors to achieve a greater level of performance and realize opportunities for success.
Head Office Address:
PriceMetrix Inc.
40 University Avenue
Suite 200
Toronto, Ontario
M5J 1T1
Canada
Telephone and Fax:
Tel: (416) 955-0514
Fax: (416) 955-0501
Deep Discount Brokers USA
http://www.tdameritrade.com/whychoose.html
When investing with TD AMERITRADE
you'll find state-of-the-art tools, outstanding personal service, affordable pricing and innovative technology. As an independent investor, you know where you want to go. We're committed to helping you get there by empowering your path to pursue your goals.
Fostering your independent spirit
Need a little support? Looking for a lot? Whatever level of support and education you need to help pursue your financial goals, you'll find it at TD AMERITRADE. We deliver an extensive array of education and services to empower your trading or investing plan.
Independent, objective research to count on
We can help you make more informed investing decisions with powerful, independent market research from third-party industry leaders. And because we don't sell investment products that carry our name, you can count on unbiased market information to power up your investing strategy.
Investing for your long-term plan
Find a wide range of practical solutions,impartial guidance and service to help you create a path to your long-term goals…all at a great value.
Powerful trading and market tools
Spot and seize potential market opportunities with our powerful online trading tools. Monitor the markets and manage data easily to put your trading strategy into action. We make it convenient with our state-of-the–art trading and market tools. Get the real-time market information you want to help you make more informed trading decisions.
Straightforward, affordable pricing
You won't be charged any maintenance fees and you'll get low, flat-rate $9.99 commissions on Internet equity trades no matter how many shares you buy. That's our straightforward pricing. Clear and simple.
If broker assistance is required, the charges are
Interactive Voice Response (IVR) Telephone System $34.99
Broker-assisted $44.99
Flexible support, outstanding service
No matter where you are or what level of support you need, we're here. Online 24 hours a day, seven days a week. Over the phone for your convenience. Or one-on-one, for personal service at one of our nationwide TD AMERITRADE branches.
Your security is our priority
We go to great lengths to safeguard your information from the minute you open your account, and we protect you with our Asset Protection Guarantee.
Nationwide branch network
Get individualized assistance and personal guidance by visiting one of our nationwide branches. You'll discover the tools and services to help you reach your goals.
-----------------
https://us.etrade.com/e/t/welcome/whychooseetrade
WHY CHOOSE E*TRADE?
A history of innovation and value.
In 1983, the first online trade was placed using early E*TRADE technology. Today, E*TRADE FINANCIAL is a global financial services leader, delivering value and innovation to millions of customers in more than 40 countries worldwide.
Strength: 4.3 million accounts worldwide
Stability: A solid history
Value: Always, more for less
Service: Online, by phone, in person
The value behind E*TRADE FINANCIAL's name lies in its tireless effort to challenge the old ways of doing business. We succeed in delivering a diversified and integrated portfolio of innovative, customer-focused brokerage and banking products and services by remaining true to our operating ideals and well-proven formula-regularly asking, can this be done better? By applying this level of discipline to our Retail, Corporate and Institutional businesses, we are able to deliver long-term value to our customers and to our shareholders.
Mission Statement:
To create long term shareholder value through superior financial performance driven by the delivery of a diversified range of innovative, customer-focused financial products and services and supported by an operating culture based on the highest levels of teamwork, efficiency and integrity.
Commissions
Stock and Options Trades
Qualifications: commission per transaction
1500+ trades/quarter: $6.99
150-1499 trades/quarter : $7.99
$50,000+ in assets or 30-149 trades/quarter : $9.99
Less than $50,000 in assets and 0-29 trades/quarter : $12.99
-----------
When investing with TD AMERITRADE
you'll find state-of-the-art tools, outstanding personal service, affordable pricing and innovative technology. As an independent investor, you know where you want to go. We're committed to helping you get there by empowering your path to pursue your goals.
Fostering your independent spirit
Need a little support? Looking for a lot? Whatever level of support and education you need to help pursue your financial goals, you'll find it at TD AMERITRADE. We deliver an extensive array of education and services to empower your trading or investing plan.
Independent, objective research to count on
We can help you make more informed investing decisions with powerful, independent market research from third-party industry leaders. And because we don't sell investment products that carry our name, you can count on unbiased market information to power up your investing strategy.
Investing for your long-term plan
Find a wide range of practical solutions,impartial guidance and service to help you create a path to your long-term goals…all at a great value.
Powerful trading and market tools
Spot and seize potential market opportunities with our powerful online trading tools. Monitor the markets and manage data easily to put your trading strategy into action. We make it convenient with our state-of-the–art trading and market tools. Get the real-time market information you want to help you make more informed trading decisions.
Straightforward, affordable pricing
You won't be charged any maintenance fees and you'll get low, flat-rate $9.99 commissions on Internet equity trades no matter how many shares you buy. That's our straightforward pricing. Clear and simple.
If broker assistance is required, the charges are
Interactive Voice Response (IVR) Telephone System $34.99
Broker-assisted $44.99
Flexible support, outstanding service
No matter where you are or what level of support you need, we're here. Online 24 hours a day, seven days a week. Over the phone for your convenience. Or one-on-one, for personal service at one of our nationwide TD AMERITRADE branches.
Your security is our priority
We go to great lengths to safeguard your information from the minute you open your account, and we protect you with our Asset Protection Guarantee.
Nationwide branch network
Get individualized assistance and personal guidance by visiting one of our nationwide branches. You'll discover the tools and services to help you reach your goals.
-----------------
https://us.etrade.com/e/t/welcome/whychooseetrade
WHY CHOOSE E*TRADE?
A history of innovation and value.
In 1983, the first online trade was placed using early E*TRADE technology. Today, E*TRADE FINANCIAL is a global financial services leader, delivering value and innovation to millions of customers in more than 40 countries worldwide.
Strength: 4.3 million accounts worldwide
Stability: A solid history
Value: Always, more for less
Service: Online, by phone, in person
The value behind E*TRADE FINANCIAL's name lies in its tireless effort to challenge the old ways of doing business. We succeed in delivering a diversified and integrated portfolio of innovative, customer-focused brokerage and banking products and services by remaining true to our operating ideals and well-proven formula-regularly asking, can this be done better? By applying this level of discipline to our Retail, Corporate and Institutional businesses, we are able to deliver long-term value to our customers and to our shareholders.
Mission Statement:
To create long term shareholder value through superior financial performance driven by the delivery of a diversified range of innovative, customer-focused financial products and services and supported by an operating culture based on the highest levels of teamwork, efficiency and integrity.
Commissions
Stock and Options Trades
Qualifications: commission per transaction
1500+ trades/quarter: $6.99
150-1499 trades/quarter : $7.99
$50,000+ in assets or 30-149 trades/quarter : $9.99
Less than $50,000 in assets and 0-29 trades/quarter : $12.99
-----------
Monday, November 26, 2007
Online Broking - Evolution and Strategic Initiatives - International
2001
Following the adoption of the Internet as a key trading channel by major players during the past several years, the US broking market witnessed explosive growth. There were around 18 million online accounts31 with more than 1 trillion USD in assets in 2000 -- more-than double the 7 million accounts and 430 billion USD in assets in 1998. Online trades accounted for more than 40 percent of all retail trades in the US market. In just three or four years, both average online trades per day and the number of online broking firms rose more than 10 times to 1.1 million trades per day and 200 firms in 2000..
From a later starting point, online brokerage is also showing spectacular growth in other countries.
The European market more than doubled to 3.7 million accounts in 2000.
Germany has taken the lead in terms of absolute numbers with around half of the market, followed by Sweden, France, United Kingdom, Netherlands, Italy and Spain.
There are already around 150 players on the European online broking market.
There were an estimated 305,000 online investors in the United Kingdom in the first quarter of 2001 (up by 6 per cent from 2000:Q4), and the number of online trades was 776,000.
In Japan, according to a March 2001 survey, there are 1.9 million online trading accounts, an increase of 46 per cent in six months. More than a third of stock trading by individuals (“retail trades”) was conducted online during the six months from October 2000 to March 2001.
In Hong Kong, China there was a staggering 99 online brokers in April 2001 (and an additional 8 brokerage advisors), but no information is available about the number of actual clients.
In Turkey, and estimated 13 per cent of the daily orders on the Istanbul Stock Exchange in early 2001 were conveyed to brokers via electronic networks. On current information, e-broking penetration (defined as the number of online brokerage accounts relative to total population) is internationally high in countries such as Canada, Korea, United States and Sweden.
http://www.oecd.org/dataoecd/61/31/2676135.pdf
Following the adoption of the Internet as a key trading channel by major players during the past several years, the US broking market witnessed explosive growth. There were around 18 million online accounts31 with more than 1 trillion USD in assets in 2000 -- more-than double the 7 million accounts and 430 billion USD in assets in 1998. Online trades accounted for more than 40 percent of all retail trades in the US market. In just three or four years, both average online trades per day and the number of online broking firms rose more than 10 times to 1.1 million trades per day and 200 firms in 2000..
From a later starting point, online brokerage is also showing spectacular growth in other countries.
The European market more than doubled to 3.7 million accounts in 2000.
Germany has taken the lead in terms of absolute numbers with around half of the market, followed by Sweden, France, United Kingdom, Netherlands, Italy and Spain.
There are already around 150 players on the European online broking market.
There were an estimated 305,000 online investors in the United Kingdom in the first quarter of 2001 (up by 6 per cent from 2000:Q4), and the number of online trades was 776,000.
In Japan, according to a March 2001 survey, there are 1.9 million online trading accounts, an increase of 46 per cent in six months. More than a third of stock trading by individuals (“retail trades”) was conducted online during the six months from October 2000 to March 2001.
In Hong Kong, China there was a staggering 99 online brokers in April 2001 (and an additional 8 brokerage advisors), but no information is available about the number of actual clients.
In Turkey, and estimated 13 per cent of the daily orders on the Istanbul Stock Exchange in early 2001 were conveyed to brokers via electronic networks. On current information, e-broking penetration (defined as the number of online brokerage accounts relative to total population) is internationally high in countries such as Canada, Korea, United States and Sweden.
http://www.oecd.org/dataoecd/61/31/2676135.pdf
Integration of ILFS Investmentsmart by Etrade
IL&FS Investsmart came into being on September 1, 1997, as a wholly owned subsidiary of Infrastructure Leasing & Financial Services. IL&FS is a leading non-banking, financial company that primarily promotes infrastructure development.
Investsmart is a financial services company engaged in intermediation of financial products and financial advisory services for retail, institutional investors, and corporates. It also forayed into merchant banking and commodity broking business, besides distribution of insurance products. Such impressive parentage helped the company in the early days to get good institutional clients. But overall the financials were not looking very attractive.
In 2,000, ORIX Corporation, an integrated financial services group based in Tokyo, picked up 27.59% stake in the company. The same year it launched its fully functional website, investsmartindia.com. In January 2002, it amalgamated IL&FS Merchant Banking Services and DebtonNet India with IL&FS Investsmart.
These consolidation exercises were taken to build a strong balance sheet and to prepare itself for the future. After its public issue at Rs 125 in July 2005, the scrip is still hovering at around Rs 170-200 for the last two years. For instance in 2006-07, both its topline and bottomline took a hit in view of the stagnant growth and branch expansion exercises. It set up 37 new branches.
Revenue rose marginally by 7% from Rs 224 crore in 2005-06 to Rs 241 crore in 2006-07. Similarly, operating profit dipped to Rs 70 crore from Rs 117 crore in the previous year. But with E*Trade as its partner, the future will surely not be a mirror of the past. Already there are visible signs of change. A comparison of retail revenues for 2006-07 and the current six months, gives a clear picture of this change. These figures held the shape of things to come.
E*Trade reported net revenues of USD 2.4 billion or Rs 9,600 crore in 2006 with net income of USD 629 million or Rs 2,500 crore. It manages retail client assets worth USD 194.9 billion and customer cash and deposits at USD 33.6 billion in 2006. E*Trade has grown through the acquisitions route. It did three major acquisitions between 2005-06. So, what did a big player like E*Trade see in IL&FS?
Devinjit Singh, Head-Investment Banking, Mergers & Acquisitions India, said, ?Well in that particular case, I guess there were two or three things which E*Trade was looking to achieve. The first was to be able to acquire a business which had customers. Second, was to acquire an established platform for the distribution of its products. Third, was an access to the management that Investsmart had built. All of which probably proved appealing to E*Trade to establish and grow its business in India.?
Etrade did not suddenly acquire Investsmart. It came in when SAIF Investment Company, Mauritius, an affiliate of Soft Bank Corporation USA decided to have an Indian presence. Soft Bank was also a stakeholder in E*Trade. So, E*Trade too decided to take up 14% stake in Investsmart while SAIF took a 20% stake. That was in January 2005. In July 2005, the company came out with an IPO issue where stakes got diluted. A GDR issue closely followed this in December 2005.
After getting a taste of the Indian market for over one year, E*Trade felt it opportune to raise its stake further to 43% in March. E*Trade increased stake to 17.86% while subscribing to Investsmart?s GDR issue in December 2005, further increased stake to 37% by purchase of GDRs from the secondary market and then acquired 6% through open offer.
*(Announced a tender offer for an additional 20 percent of the shares of IL&FS Investsmart Limited, one of India's leading financial services organizations, providing a complete range of Financial Management Solutions for Retail and Institutional customers(July-September 2006)
This now makes it a core partner with IL&FS having a 29% stake. By beginning of 2006, not only did Investsmart have a strong partner in E*Trade but also oodles of cash to expand its business. Its kitty was Rs 550 crore, of this Rs 440 crore came from GDR proceeds and the balance Rs 110 crore from IPO. That money is now going to change the dynamics of the business.
Sachin Joshi, ED-Finance and Operations, IL&FS Investsmart, said, ?The purpose of having the GDR and IPO was to go in for major expansion for branches and mobilise resources which could be utilized to undertake securities and securities related financing activity. With E*Trade coming in as a strategic partner, we could also look at few acquisitions over a period of time. We mobilized about Rs 550 crore out of the IPO and GDR proceeds. Add to that our own network, today we have about Rs 750 crore of surplus cash available in the system, out of which at least Rs 650 crore could be utilized to do all these activities and change the face of the balance sheet.
Besides money muscle, Investsmart now has huge marketing and technological benefits by partnering with E*Trade. It will change the way Investsmart does business. Investsmart can now rely heavily on the expertise developed by E*Trade in developing brand architecture, marketing strategies, and tools to position the company as a dominant player in the domestic market.
More than operational expertise, what E*Trade Financial brought to the table was the experience of surviving the boom-bust cycle. This fast growing brokerage firm suffered red ink in its balance sheet in 2001, when the dotcom bubble went bust. But E*Trade survived all of that, and it bounced back with full vigour. This rich experience is what E*Trade now brings to Investsmart.
How E*Trade changed the way business was done at Investsmart?
To start with, it adopted its global policy of focused strategy and focused execution. What E*Trade brought to the table was its strategy behind providing the products. Customer service, branding, and technology all of these will give Investsmart a competitive edge.
What E*Trade brings on the customer side is focus. Till E*Trade came into the picture, Investsmart was trying to cater to all kinds of customers like low-end, middle-level, and high-end. Catering to people at all levels meant precious time spent on servicing low-end customers, thereby losing a high-end customer. Now, all of that will change.
Sandeep Presswala, ED-Retail Business, IL&FS Investsmart, said, ?One of the very important things that has happened post E*Trade coming was that they used to have a fairly defined customer focus. We have identified the mass affluent as a customer audience where we want to define all our focus and energies on. We see the segment as a fairly important segment in our scheme of things as we go forward. Looking at the growth of the service sector and looking at the growth of corporate India mass affluent, which is the most important segment in our customer segmentation strategy, is going to be the key focus area for our business going forward. Once you have a customer focus at the center of your business strategy, everything revolves around that.
But finally what matters is making the right call in a volatile and global market. That is only possible by good research back up. In a globalised India, where the economy is impacted by international events, financial research cannot be done on a standalone basis, but has to be done on a consolidated basis. Investsmart realized this two years ago.
According Sreesankar R, Head of Research, IL&FS Investsmart, they have a strong research team out here and we have created a team of around 22 people right now in India.
We have an exposure to the retail and institutional side of the market. In addition, we have an investment banking team as well, in which everything has been created over a period of 30 months.?
E*Trade follows a different business model. They do not have a research team. They outsource research and are more of an execution broker, than a full investment bank, in terms of the institutional and retail search, and investment banking activity. With our research, we will be able to give it to institutional clients of E*Trade and also offers in IPOs and various deals, that we bring about will be able to be distributed to those clients as well.
Integration of new processes in any organization takes time. E*Trade is testing Investsmart for adoption of its technology and marketing processes. Bringing about a whole mindset change is not going to be easy. How is E*Trade going to manage that?
Leslie Whiteford, MD and CEO, IL&FS Investsmart, has over 25 years of experience in the financial services sector. He comes with 18 years of experience with E*Trade?s operations. A chartered accountant by profession, Leslie brings the rich expertise of the global financial markets into the country. Having acquired several companies, he knows exactly what integration is all about. what his plans for India?
Excerpts from CNBC-TV18's interview with Leslie Whiteford:
Q: Why did you choose IL&FS?
A: When we were introduced to IL&FS, we found a company that shared some of the values that we have in our business. Basically, it is an offering to the customer of competitive priced products, with a superior level of service and traditional core values.
Q: E*Trade would also be bringing in and changing a lot of processes at Investsmart and that means a kind of mindset change. How has it been till now?
A: The one thing I found is that the management and the employees here have been very receptive to new ideas coming in, new approaches and new styles, in terms of implementing and executing it. Yes, anything new is uncomfortable. But I think they have coped very well in doing that.
I would say the main changes we are bringing in, is a greater amount of discipline around the business processes and decision-making. There are vast opportunities out there in the marketplace and it is impossible to go for every single opportunity that exists.
Similarly, in terms of technology development, you have got a limited pool of technology resources to be pulled from. You have to formally evaluate which one to do. So, rather than being driven by the emotion or whoever is the most powerful personality, to get their project done ahead of someone else?s project, we have brought in a greater discipline of evaluating what the returns are, based on some of the technology developments.
Q: Have they been fast to adapt to your kind of technology changes, has there been any kind of integration issues?
A: They have been fast to adapt and accept the vision. I think where you are taking management out of a frontline business position into more of a product development area, they feel that they have lost a little bit and have moved away from the edge.
Change is uncomfortable, but I think they all believe in the fact that this discipline does position us well for the dramatic growth that we are expected to see in the marketplace.
Q: So what are the kinds of changes that you are going to bring here to see that Investsmart also becomes a kind of a diversified financial services company?
A: Let me deal first with the online sector. I think the Indian investor is still very much in its infancy, in terms of the developments of the marketplace here. Look for the human touch, human support, human advice and the validations of what they want to do. And quite clearly that is why we have seen the broad rollout of the branch structures and the franchisees structure, that we share with many of the other participants in the marketplace.
The online space is going to come at a later point in time. So, in the interim, we can use our technology to deliver the tools to our employees in the branches, to enable them to provide better, more efficient, faster advice to the customers that they are serving.
The first space would be giving better tools to enable our relationship managers, our customer service representatives to provide the best service to the Indian investor and ultimately to allow the Indian investor to take control of a lot of these things themselves.
Q: What is the kind of branding exercise that you have planned for Investsmart? Are you going to do some name change?
A: IL&FS Investsmart is known as a financial multiplex and has multiple products within its product suite. The challenge that we face is that they were all running on separate platforms. So, it was almost like running eight separate businesses. So, if you had 1 customer who wanted say eight products, he could have eight different customer experiences. So, from our point of view, we wanted to integrate the product offering, not only in terms of the back office platforms, of bringing them together; but also in terms of front office.
The customer service representatives, the relationship manager could see on a single position all the areas that an investor and customer engaged with the firm.
So, getting that technology up and running and solid and making sure that it is scalable is where we have been focusing for the past few months and really just trying to shape our vision.
Moving on to the branding, you obviously don?t want to go in and create a brand and spend the dollars, until you feel that your infrastructure is there to support the product and service and you feel that you are marketing to your customer. So, we are just at the stage of moving into that era. I think the challenge for the marketing agencies is to take three very different brands and bringing them together, each standing for something that means something to different types of investor groups. So, we are still at the stage of formulating and how we are going to do that.
A: I wouldn?t see it so much as catching up. It is always a challenge to pick what the right time is to enter into a marketplace. If you were to consider that our main expertise is in the area of technology and online applications, compared to our peer group, we are well ahead. We are the only one of our peer group in the US, that are expanding internationally. So, that is looking it at from our peer group and the position in that space.
In terms of the Indian marketplace, there are still many foreign brokerages coming into India and increasing their stakes with partners in the Indian marketplace. We have been in for about two years. So, we are not that far behind.
We have been taking our time and making sure that we have got our positioning right. We have got our vision and our strategy right. We are all pretty firm and agreed on that space.
In November 2007 , the MD is still optimistic.
19/11/2007 interview with Leslie Whiteford Economic Times
Don’t you think E-Trade is entering the Indian market at the peak of the bull-run?
The stock market index may be near its historic high, but there is still immense growth potential in India. Retail investors have only begun to invest in equity and online trading in India is still in its infancy, compared to the US where E-Trade enjoys a leadership position and continues to grow. But there are greater growth opportunities outside the US and the decision to enter India is part of E-Trade’s international strategy to tap this opportunity. We have already obtained 17 licenses around the world and have a presence in a number of European and Asian markets. Early this year, E-Trade started operations in Dubai and Singapore and it has been in Hong Kong for a while. E-Trade is watching China, but the country has tight restrictions for foreign brokerages.
Does E-Trade wants to look at the Indian market beyond being a broking entity? Do you have any plans to set up a bank or MF or any insurance company at a later date?
Within the IL&FS Investsmart group, we already have a non-banking finance company and can offer a comprehensive financial solution to our clients. IL&FS group already offers margin-financing, loan against securities, IPO financing, loans for mutual funds and other related facilities. In the US, one of the drivers for E-Trade’s growth was the successful integration of the banking and brokerage businesses. IIL can’t bring that level of integration in India right now due to regulatory restrictions.
There are restrictions on foreigners entering the banking sector and on banks lending to the capital market, which make it challenging for IIL to fully replicate the E-Trade US model. The norms are expected to be liberalised in ’09, which will provide us an attractive opportunity.
Our business model will balance the regulatory restrictions with the needs of our customers. We don’t have any real desire to foray into the mutual fund (asset management) or insurance business beyond our existing advisory and broking business at the moment. Our focus right now is on the advisory and trading side of the business and we would rather build scale in that segment.
http://news.moneycontrol.com/mccode/news/article/news_article.php?autono=311930
http://yahoo.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?SessionID=BjZDCmmKL9kTjyu&ID=4708527 - Form 8K of Etrade dated 18 October 2006
http://economictimes.indiatimes.com/ET_Features/Investors_Guide/Indias_the_place_to_be_in/articleshow/msid-2549456,curpg-1.cms 19-11-2007
Investsmart is a financial services company engaged in intermediation of financial products and financial advisory services for retail, institutional investors, and corporates. It also forayed into merchant banking and commodity broking business, besides distribution of insurance products. Such impressive parentage helped the company in the early days to get good institutional clients. But overall the financials were not looking very attractive.
In 2,000, ORIX Corporation, an integrated financial services group based in Tokyo, picked up 27.59% stake in the company. The same year it launched its fully functional website, investsmartindia.com. In January 2002, it amalgamated IL&FS Merchant Banking Services and DebtonNet India with IL&FS Investsmart.
These consolidation exercises were taken to build a strong balance sheet and to prepare itself for the future. After its public issue at Rs 125 in July 2005, the scrip is still hovering at around Rs 170-200 for the last two years. For instance in 2006-07, both its topline and bottomline took a hit in view of the stagnant growth and branch expansion exercises. It set up 37 new branches.
Revenue rose marginally by 7% from Rs 224 crore in 2005-06 to Rs 241 crore in 2006-07. Similarly, operating profit dipped to Rs 70 crore from Rs 117 crore in the previous year. But with E*Trade as its partner, the future will surely not be a mirror of the past. Already there are visible signs of change. A comparison of retail revenues for 2006-07 and the current six months, gives a clear picture of this change. These figures held the shape of things to come.
E*Trade reported net revenues of USD 2.4 billion or Rs 9,600 crore in 2006 with net income of USD 629 million or Rs 2,500 crore. It manages retail client assets worth USD 194.9 billion and customer cash and deposits at USD 33.6 billion in 2006. E*Trade has grown through the acquisitions route. It did three major acquisitions between 2005-06. So, what did a big player like E*Trade see in IL&FS?
Devinjit Singh, Head-Investment Banking, Mergers & Acquisitions India, said, ?Well in that particular case, I guess there were two or three things which E*Trade was looking to achieve. The first was to be able to acquire a business which had customers. Second, was to acquire an established platform for the distribution of its products. Third, was an access to the management that Investsmart had built. All of which probably proved appealing to E*Trade to establish and grow its business in India.?
Etrade did not suddenly acquire Investsmart. It came in when SAIF Investment Company, Mauritius, an affiliate of Soft Bank Corporation USA decided to have an Indian presence. Soft Bank was also a stakeholder in E*Trade. So, E*Trade too decided to take up 14% stake in Investsmart while SAIF took a 20% stake. That was in January 2005. In July 2005, the company came out with an IPO issue where stakes got diluted. A GDR issue closely followed this in December 2005.
After getting a taste of the Indian market for over one year, E*Trade felt it opportune to raise its stake further to 43% in March. E*Trade increased stake to 17.86% while subscribing to Investsmart?s GDR issue in December 2005, further increased stake to 37% by purchase of GDRs from the secondary market and then acquired 6% through open offer.
*(Announced a tender offer for an additional 20 percent of the shares of IL&FS Investsmart Limited, one of India's leading financial services organizations, providing a complete range of Financial Management Solutions for Retail and Institutional customers(July-September 2006)
This now makes it a core partner with IL&FS having a 29% stake. By beginning of 2006, not only did Investsmart have a strong partner in E*Trade but also oodles of cash to expand its business. Its kitty was Rs 550 crore, of this Rs 440 crore came from GDR proceeds and the balance Rs 110 crore from IPO. That money is now going to change the dynamics of the business.
Sachin Joshi, ED-Finance and Operations, IL&FS Investsmart, said, ?The purpose of having the GDR and IPO was to go in for major expansion for branches and mobilise resources which could be utilized to undertake securities and securities related financing activity. With E*Trade coming in as a strategic partner, we could also look at few acquisitions over a period of time. We mobilized about Rs 550 crore out of the IPO and GDR proceeds. Add to that our own network, today we have about Rs 750 crore of surplus cash available in the system, out of which at least Rs 650 crore could be utilized to do all these activities and change the face of the balance sheet.
Besides money muscle, Investsmart now has huge marketing and technological benefits by partnering with E*Trade. It will change the way Investsmart does business. Investsmart can now rely heavily on the expertise developed by E*Trade in developing brand architecture, marketing strategies, and tools to position the company as a dominant player in the domestic market.
More than operational expertise, what E*Trade Financial brought to the table was the experience of surviving the boom-bust cycle. This fast growing brokerage firm suffered red ink in its balance sheet in 2001, when the dotcom bubble went bust. But E*Trade survived all of that, and it bounced back with full vigour. This rich experience is what E*Trade now brings to Investsmart.
How E*Trade changed the way business was done at Investsmart?
To start with, it adopted its global policy of focused strategy and focused execution. What E*Trade brought to the table was its strategy behind providing the products. Customer service, branding, and technology all of these will give Investsmart a competitive edge.
What E*Trade brings on the customer side is focus. Till E*Trade came into the picture, Investsmart was trying to cater to all kinds of customers like low-end, middle-level, and high-end. Catering to people at all levels meant precious time spent on servicing low-end customers, thereby losing a high-end customer. Now, all of that will change.
Sandeep Presswala, ED-Retail Business, IL&FS Investsmart, said, ?One of the very important things that has happened post E*Trade coming was that they used to have a fairly defined customer focus. We have identified the mass affluent as a customer audience where we want to define all our focus and energies on. We see the segment as a fairly important segment in our scheme of things as we go forward. Looking at the growth of the service sector and looking at the growth of corporate India mass affluent, which is the most important segment in our customer segmentation strategy, is going to be the key focus area for our business going forward. Once you have a customer focus at the center of your business strategy, everything revolves around that.
But finally what matters is making the right call in a volatile and global market. That is only possible by good research back up. In a globalised India, where the economy is impacted by international events, financial research cannot be done on a standalone basis, but has to be done on a consolidated basis. Investsmart realized this two years ago.
According Sreesankar R, Head of Research, IL&FS Investsmart, they have a strong research team out here and we have created a team of around 22 people right now in India.
We have an exposure to the retail and institutional side of the market. In addition, we have an investment banking team as well, in which everything has been created over a period of 30 months.?
E*Trade follows a different business model. They do not have a research team. They outsource research and are more of an execution broker, than a full investment bank, in terms of the institutional and retail search, and investment banking activity. With our research, we will be able to give it to institutional clients of E*Trade and also offers in IPOs and various deals, that we bring about will be able to be distributed to those clients as well.
Integration of new processes in any organization takes time. E*Trade is testing Investsmart for adoption of its technology and marketing processes. Bringing about a whole mindset change is not going to be easy. How is E*Trade going to manage that?
Leslie Whiteford, MD and CEO, IL&FS Investsmart, has over 25 years of experience in the financial services sector. He comes with 18 years of experience with E*Trade?s operations. A chartered accountant by profession, Leslie brings the rich expertise of the global financial markets into the country. Having acquired several companies, he knows exactly what integration is all about. what his plans for India?
Excerpts from CNBC-TV18's interview with Leslie Whiteford:
Q: Why did you choose IL&FS?
A: When we were introduced to IL&FS, we found a company that shared some of the values that we have in our business. Basically, it is an offering to the customer of competitive priced products, with a superior level of service and traditional core values.
Q: E*Trade would also be bringing in and changing a lot of processes at Investsmart and that means a kind of mindset change. How has it been till now?
A: The one thing I found is that the management and the employees here have been very receptive to new ideas coming in, new approaches and new styles, in terms of implementing and executing it. Yes, anything new is uncomfortable. But I think they have coped very well in doing that.
I would say the main changes we are bringing in, is a greater amount of discipline around the business processes and decision-making. There are vast opportunities out there in the marketplace and it is impossible to go for every single opportunity that exists.
Similarly, in terms of technology development, you have got a limited pool of technology resources to be pulled from. You have to formally evaluate which one to do. So, rather than being driven by the emotion or whoever is the most powerful personality, to get their project done ahead of someone else?s project, we have brought in a greater discipline of evaluating what the returns are, based on some of the technology developments.
Q: Have they been fast to adapt to your kind of technology changes, has there been any kind of integration issues?
A: They have been fast to adapt and accept the vision. I think where you are taking management out of a frontline business position into more of a product development area, they feel that they have lost a little bit and have moved away from the edge.
Change is uncomfortable, but I think they all believe in the fact that this discipline does position us well for the dramatic growth that we are expected to see in the marketplace.
Q: So what are the kinds of changes that you are going to bring here to see that Investsmart also becomes a kind of a diversified financial services company?
A: Let me deal first with the online sector. I think the Indian investor is still very much in its infancy, in terms of the developments of the marketplace here. Look for the human touch, human support, human advice and the validations of what they want to do. And quite clearly that is why we have seen the broad rollout of the branch structures and the franchisees structure, that we share with many of the other participants in the marketplace.
The online space is going to come at a later point in time. So, in the interim, we can use our technology to deliver the tools to our employees in the branches, to enable them to provide better, more efficient, faster advice to the customers that they are serving.
The first space would be giving better tools to enable our relationship managers, our customer service representatives to provide the best service to the Indian investor and ultimately to allow the Indian investor to take control of a lot of these things themselves.
Q: What is the kind of branding exercise that you have planned for Investsmart? Are you going to do some name change?
A: IL&FS Investsmart is known as a financial multiplex and has multiple products within its product suite. The challenge that we face is that they were all running on separate platforms. So, it was almost like running eight separate businesses. So, if you had 1 customer who wanted say eight products, he could have eight different customer experiences. So, from our point of view, we wanted to integrate the product offering, not only in terms of the back office platforms, of bringing them together; but also in terms of front office.
The customer service representatives, the relationship manager could see on a single position all the areas that an investor and customer engaged with the firm.
So, getting that technology up and running and solid and making sure that it is scalable is where we have been focusing for the past few months and really just trying to shape our vision.
Moving on to the branding, you obviously don?t want to go in and create a brand and spend the dollars, until you feel that your infrastructure is there to support the product and service and you feel that you are marketing to your customer. So, we are just at the stage of moving into that era. I think the challenge for the marketing agencies is to take three very different brands and bringing them together, each standing for something that means something to different types of investor groups. So, we are still at the stage of formulating and how we are going to do that.
A: I wouldn?t see it so much as catching up. It is always a challenge to pick what the right time is to enter into a marketplace. If you were to consider that our main expertise is in the area of technology and online applications, compared to our peer group, we are well ahead. We are the only one of our peer group in the US, that are expanding internationally. So, that is looking it at from our peer group and the position in that space.
In terms of the Indian marketplace, there are still many foreign brokerages coming into India and increasing their stakes with partners in the Indian marketplace. We have been in for about two years. So, we are not that far behind.
We have been taking our time and making sure that we have got our positioning right. We have got our vision and our strategy right. We are all pretty firm and agreed on that space.
In November 2007 , the MD is still optimistic.
19/11/2007 interview with Leslie Whiteford Economic Times
Don’t you think E-Trade is entering the Indian market at the peak of the bull-run?
The stock market index may be near its historic high, but there is still immense growth potential in India. Retail investors have only begun to invest in equity and online trading in India is still in its infancy, compared to the US where E-Trade enjoys a leadership position and continues to grow. But there are greater growth opportunities outside the US and the decision to enter India is part of E-Trade’s international strategy to tap this opportunity. We have already obtained 17 licenses around the world and have a presence in a number of European and Asian markets. Early this year, E-Trade started operations in Dubai and Singapore and it has been in Hong Kong for a while. E-Trade is watching China, but the country has tight restrictions for foreign brokerages.
Does E-Trade wants to look at the Indian market beyond being a broking entity? Do you have any plans to set up a bank or MF or any insurance company at a later date?
Within the IL&FS Investsmart group, we already have a non-banking finance company and can offer a comprehensive financial solution to our clients. IL&FS group already offers margin-financing, loan against securities, IPO financing, loans for mutual funds and other related facilities. In the US, one of the drivers for E-Trade’s growth was the successful integration of the banking and brokerage businesses. IIL can’t bring that level of integration in India right now due to regulatory restrictions.
There are restrictions on foreigners entering the banking sector and on banks lending to the capital market, which make it challenging for IIL to fully replicate the E-Trade US model. The norms are expected to be liberalised in ’09, which will provide us an attractive opportunity.
Our business model will balance the regulatory restrictions with the needs of our customers. We don’t have any real desire to foray into the mutual fund (asset management) or insurance business beyond our existing advisory and broking business at the moment. Our focus right now is on the advisory and trading side of the business and we would rather build scale in that segment.
http://news.moneycontrol.com/mccode/news/article/news_article.php?autono=311930
http://yahoo.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?SessionID=BjZDCmmKL9kTjyu&ID=4708527 - Form 8K of Etrade dated 18 October 2006
http://economictimes.indiatimes.com/ET_Features/Investors_Guide/Indias_the_place_to_be_in/articleshow/msid-2549456,curpg-1.cms 19-11-2007
Sunday, November 25, 2007
online broking India - I
September 2000
Emergence of e-broking
Online trading (also called e-broking) is slowly attracting investor fancy in India.
Advertisements are appearing in the print and electronic media.
A small beginning
The current trading turnover at around Rs. 10 crores per day from online trading compared to a combined gross turnover of around Rs. 9000-10,000 crores handled by the BSE and NSE together. online trading has a long way to go. With some ten dotcom players, such as icicidirect.com, investsmart, 5paisa.com, indiabulls, and a host of brokers, such as kotakstreet, sharekhan, motilaloswal, Geojit Securities and duttstock, entering the online ring promises exciting times ahead.
brokerage : For instance, icicidirect.com, as the first entrant into e-broking, charges the highest brokerage (for delivery transactions) at 0.85 per cent per trade. It is followed by InvestSmart which charges 0.75 per cent. However, late entrants such as 5Paisa.com, sharekhan and kotakstreet.com all charge 0.25 per cent of the transaction value for delivery-based trades.
Clearly, the pattern of entry into e-broking shows that ``brokerage and associated costs'' can be the differentiators only for a while. icicidirect.com as the first entrant, has touted itself as the first integrated e-broking service provider in the market. Though its brokerage charges are higher than its peers, it has positioned itself as the only player to have online broking, banking and depository interface in one module, to offer a fully integrated online trading experience.
Players such as SSKI's sharekhan, which launched their scheme in July, have tried to steal a march over icicidirect.com by introducing a flat fee product of Rs. 1,000 per month. This trade-as-much-as-you-want scheme was an innovation targeted mainly at frenzied day-traders.
But even this innovation of sharekhan was challenged. kotakstreet.com, which launched its e-broking services in August, not only halved the flat fee from Rs. 1,000 to Rs. 500, but also allowed short sales and offered clients the option of trading against securities up to three times sales marked for delivery.
Reacting to the cut-rate discounts, ICICI Direct has reduced its minimum brokerage per trade from Rs 100 to Rs 25 and the minimum trade size from Rs 6,000 to Rs 1,000.
Clearly, innovation offers limited scope for it is a matter of time before almost all the schemes offer more or less identical features.
As online trading is still at a nascent stage, practically all the major players which have set up e-broking outfits, aim at achieving two objectives. One, to broadbase the overall trading of investors, while holding their existing clientele intact. Two, most established e-broking outfits, such as icicidirect.com, investsmart (an IL&FS initiative) and kotakstreet.com, are using their brick-and-mortar presence to encourage investors to go online. Given the poor connectivity and Internet infrastructure, most e-broking majors are trying to raise the comfort level of the investors by assuring them that even if the Internet order-routing system breaks down, or investor access is broken for any reason, online registered investors can always exercise the option of putting through their orders offline.
Except for Probity's 5paisa (www.5paisa.com) and India Bulls, most other online brokerages are an extension of brick-and-mortar broking.
As this combination is still a new concept, most investors will be better off clarifying how the offline environment will operate, if the online environment fails for any reason. For the investor, the important thing is to ensure that this switch from online to offline is seamless and that there are no associated hidden costs.
Unless the online trading volumes increase dramatically to 10-15 per cent of the total trading volumes (or at least 20 per cent of the gross turnover of the BSE and the NSE), the brick-and-mortar outfits will continue to dominate.
Success factors:
The pedigree of the e-broker: The pedigree of the e-broker is important as that is likely to identify the serious players. Going forward, consolidation is inevitable even in this industry and when that happens, online trading sites such as icicidirect.com, investsmart and kotakstreet.com with a good pedigree have a much better chance of survival than the stand-alone sites such as 5paisa.com and Indiabulls.
Technology and back-.office infrastructure: In these early months, online trading is likely to attract a host of entrants as India has already seen so far. But the key differentiator will be the investment in technology and back-office infrastructure. Even if small-time e-broking outfits make the initial investments in technology, the recurring expenses, which would also be high, may prove to a burden in the long run.
Quality of service and security: As the industry quickly consolidates and technology gets standardised, the quality of service will be the key differentiator. Basically, the investors do evaluate the quality of service and ``security-related issues'' (say, in terms of 128-bit encryption or privacy/confidentiality in access), between two outfits. In the long run, depending on the service levels, investors switch to the better player.
Integrated package: Currently, only icicidirect.com offers a seamless 3-in-1 package of broking, banking and demat accounts. This effectively means that through the click of a mouse, an investor can buy and sell shares, and forget about the paperwork involved in settlements and transfer of shares or money. The rest of the players are also putting such an integrated package in place, but icicidirect.com has a headstart as the others may be able to offer an seamless online trading experience only after an independent payment gateway (which provides connectivity between different banks for online banking) is firmly in place.
However, the existing online trading system suffers from a major lacunae. icicidirect.com currently offers online trading services only to investors who have a bank or a demat account with ICICI. Or, investors can open an online trading account with kotakstreet.com only if they open a demat account with Kotak Securities and have a bank account either with Citibank, HDFC Bank or Global Trust Bank. If investors do not have these accounts, they have to go through the entire rigmarole of opening up the bank and demat account again for easy operation. Apart from the hassles involved, there may also be certain extra charges involved in this exercise that may have to be built into the overall cost of online trading.
e-broking transaction charges 2000
ICICI Direct
Account opening charges: Rs 750 only. For accounts opened before March 31, 2000, the account opening charge of Rs 750 will be set off against the brokerage paid for all trades done till September 30, 2000.
Fee Structure:
Delivery trades:
Less than Rs 1 million per quarter: 0.85 per cent
Rs 1 million to Rs 5 million per quarter: 0.60 per cent
Rs 5 million to Rs 10 million per quarter: 0.50 per cent
Rs 10 million and above per quarter: 0.40 per cent
Intra-settlement trading: The same fee schedule applies for squaring off transactions, but the above brokerage is to be paid only for the first leg of the transaction.
Minimum size order: The minimum value of the trade is Rs 1,000 and the minimum commission is Rs 25 per trade inclusive of demat market transaction charges, service taxes and postage of contract note.
Banking: ICICI Bank only
Margin: 100 per cent
Offline broking: Option unavailable
Shortselling: In the offing
Demat: ICICI Bank, no extra charges
Sharekhan.com
Account opening charges: No fee charged for plan A and B. For plan C and D, a fee of Rs 500 is charged which will be adjusted against future trades.
Banking facility: HDFC or Global Trust Bank
Offline broking: option available
Minimum size order: none
Shortselling: option unavailable
Demat: SSKI, extra charges
Stamp duty, turnover tax and contingent charges extra as applicable: approximately Rs 25 per Rs 100,000
Fee Structure:
Plan A: Power-Asset Account
Rs 1,000 per month for intra-settlement. The value of trade is limited only by the cash in the account for purchases and by shares in the account for sale.
Plan B: Power-Leverage Account
The fee charged is Rs 1,000 per month with no limit on trading. Twenty-five per cent margin is required. The value of any individual trade can be as much as four times the margin in your account.
Plan C: Classic-Asset Account
The fee charged is 0.25 per cent of trade value. This is targeted at those who are not yet ready for flat fee-based investing. The value of trade is limited by the cash in the account for purchases and shares in the account for sale.
Plan D: Classic-Leverage Account
The fee charged is 0.10 per cent of trade value for intra-settlement trades. The value of any individual trade can be as much as four times the margin available in your account.
5paisa.com
Account opening charges: Rs 500 only
Intra-day: 0.05 per cent for each trade
Intra-settlement: 0.05 per cent for each trade
Delivery: 0.25 per cent
Banking facility: HDFC Bank
Margin: 25 per cent
Offline broking: Option unavailable
Shortselling: Available
Minimum size order: None
Demat: IIT Corporate Services, extra charges
Kotak Street.com
Account opening charges: Rs 500 only, which will be adjusted against future trades.
Margin: 33.33 per cent, minimum Rs 5,000.
Offline broking: Option unavailable
Banking: HDFC Bank, HSBC, Global Trust Bank, CitiBank, Standard Chartered, ABN Amro or Centurion.
Shortselling: Information unavailable
Minimum size order: Rs 1,000
Demat: Kotak Securities, no extra charges.
Fee structure
The Green Channel (Cash)
In this plan, one can trade up to three times the value of the margin with kotakstreet.com.
Delivery brokerage: 0.25 per cent.
Intra-settlement brokerage: 0.10 per cent payable for both legs of the transactions.
Intra-day brokerage: 0.10 per cent for the first leg only
Service charge and other levies: Nil
The Green Channel (Securities)
In this plan, traders can pay margin in the form of securities instead of cash.
Delivery brokerage: 0.25 per cent.
Intra-settlement brokerage: 0.10 per cent payable for both legs of the transactions.
Intra-day brokerage: 0.10 per cent for the first leg only
There is an additional transaction charge of 0.15 per cent per month on the value of the applicable limit.
Service charge and other levies: Nil
The Freeway
This scheme allows investors to trade at a flat fee of Rs 500 per month up to a maximum exposure limit of Rs 250,000.
The brokerage works out to 0.20 per cent.
Service charge and other levies: Extra
The Cash Expressway
This facility allows retail investors to sell their shares and collect the payment within 48 hours.
Delivery brokerage: 0.25 per cent and a transaction fee of 0.5 per cent on the sale value.
Service charge and other levies: Nil
Money
http://www.hinduonnet.com/businessline/iw/2000/09/03/stories/0703g051.htm
http://www.rediff.com/money/2000/aug/12spec.htm
---------------
April 2005
Customer based at the end of 2004
ICICIdirect.com
The online broking arm of ICICI Web Trade, an ICICI Bank subsidiary, commands 68 per cent of the total online trading market. Its customer base has grown from 300,000 last year to 550,000 today. It has 450 branches across India, and also covers Singapore and the Gulf.
The long-term plan is to graduate from being just an e-brokerage to a one-stop shop for personal finance products and services. The platform already sells health, home, overseas travel and life insurance products online. While you can pay online for general insurance products from ICICI Lombard, a physical follow-up from ICICI Pru representatives is necessary when buying life insurance products. The portal also enables online investing in postal savings instruments such as NSC and KVP. It has made CallNTrade available across 300 towns, allowing customers to use the phone to trade if they are unable to get online.
All bank transactions have to be through ICICI Bank– the direct connectivity between trading, demat and bank accounts makes transactions quicker and safer. ICICI direct is also the first broker in India to introduce Digitally Signed Contract Notes. The process has been automated and they are instantly and securely available online.
Indiabulls.com
The customer base of the next popular trading platform has increased about 40,000 in December 2003 to 63,000 today. The portal allows trading in equities, derivatives and mutual funds, besides offering insurance and loans online. It has 78 branches in 64 cities, and it hopes to double this number over the next year.
The site gives customers real-time data and prices, and analysis backed by powerful technology. Service is real-time with 24x7 access to all information on the portal. The company has a tie-up with HDFC Bank and ABN Amro Bank for banking, and clients are not bound to use a specific DP account. Indiabulls’ charges are competitive: 0.5 per cent of the order value for the cash segment and 0.1 per cent for derivatives.
------------ICICIDirect-------- India Bulls
No. of clients1---510,000-------------63,000
(As on 1 Dec 2004)
Brokerage (% of order value)
Cash segment---0.25 to 0.75% ------------- 0.50%
Intra-day------ 0.03-0.10%---------------- 0.10%
Derivatives----- 0.03-0.10%--------------- 0.10%
Sign-up fee (Rs-----) 750------------------ 700
http://www.outlookmoney.com/scripts/IIH021C1.asp?sectionid=10&categoryid=95&articleid=5593
----------------
October 2006
Innovations in online broking — flat fee structure spreading
The flat fee model charges the clients a fixed brokerage for a specified period, irrespective of the frequency or value of transactions.
So, if you are a very active trader, then flat fee broking products may suit you better.
ICICI's Offer
Monthly fixed rate Rs. 299
max quarterly free turnover: Rs.1,50,000
Brokerage above that amount: 0.6%
Monthly fixed rate Rs. 599
max quarterly free turnover: Rs.3,00,000
Brokerage above that amount: 0.6%
Monthly fixed rate Rs. 999
max quarterly free turnover: Rs.9,00,000
Brokerage above that amount: 0.5%
Kotak SEcurities offer
Monthly fixed rate Rs. 499
per transaction fee: Rs. 9;
Otherwise per transaction fee: Rs. 20; (delivery transaction size: Rs.5000)
In the Western markets, where almost 50 per cent of the cash market trades are done online, the success of the flat fee model can be attributed to the popularity of Internet trading.
In India, where an estimated 12-15 per cent of the total cash market volumes are done online, the flat fee regime has a long way to go. The products offered are still at a nascent stage and cater to the needs of a specific group of investors only.
Why the transition?
At a time when Internet broking is emerging as a popular trading tool, scalability and accessibility have become realistic goals for the broking houses. The broking industry is thus attracting a lot of new players. With such entrants as ABN AMRO Asia Equities, Religare and, the much talked about, R-Trade, competition is set to become tougher for the established players.
http://www.blonnet.com/iw/2006/10/08/stories/2006100800591300.htm
Emergence of e-broking
Online trading (also called e-broking) is slowly attracting investor fancy in India.
Advertisements are appearing in the print and electronic media.
A small beginning
The current trading turnover at around Rs. 10 crores per day from online trading compared to a combined gross turnover of around Rs. 9000-10,000 crores handled by the BSE and NSE together. online trading has a long way to go. With some ten dotcom players, such as icicidirect.com, investsmart, 5paisa.com, indiabulls, and a host of brokers, such as kotakstreet, sharekhan, motilaloswal, Geojit Securities and duttstock, entering the online ring promises exciting times ahead.
brokerage : For instance, icicidirect.com, as the first entrant into e-broking, charges the highest brokerage (for delivery transactions) at 0.85 per cent per trade. It is followed by InvestSmart which charges 0.75 per cent. However, late entrants such as 5Paisa.com, sharekhan and kotakstreet.com all charge 0.25 per cent of the transaction value for delivery-based trades.
Clearly, the pattern of entry into e-broking shows that ``brokerage and associated costs'' can be the differentiators only for a while. icicidirect.com as the first entrant, has touted itself as the first integrated e-broking service provider in the market. Though its brokerage charges are higher than its peers, it has positioned itself as the only player to have online broking, banking and depository interface in one module, to offer a fully integrated online trading experience.
Players such as SSKI's sharekhan, which launched their scheme in July, have tried to steal a march over icicidirect.com by introducing a flat fee product of Rs. 1,000 per month. This trade-as-much-as-you-want scheme was an innovation targeted mainly at frenzied day-traders.
But even this innovation of sharekhan was challenged. kotakstreet.com, which launched its e-broking services in August, not only halved the flat fee from Rs. 1,000 to Rs. 500, but also allowed short sales and offered clients the option of trading against securities up to three times sales marked for delivery.
Reacting to the cut-rate discounts, ICICI Direct has reduced its minimum brokerage per trade from Rs 100 to Rs 25 and the minimum trade size from Rs 6,000 to Rs 1,000.
Clearly, innovation offers limited scope for it is a matter of time before almost all the schemes offer more or less identical features.
As online trading is still at a nascent stage, practically all the major players which have set up e-broking outfits, aim at achieving two objectives. One, to broadbase the overall trading of investors, while holding their existing clientele intact. Two, most established e-broking outfits, such as icicidirect.com, investsmart (an IL&FS initiative) and kotakstreet.com, are using their brick-and-mortar presence to encourage investors to go online. Given the poor connectivity and Internet infrastructure, most e-broking majors are trying to raise the comfort level of the investors by assuring them that even if the Internet order-routing system breaks down, or investor access is broken for any reason, online registered investors can always exercise the option of putting through their orders offline.
Except for Probity's 5paisa (www.5paisa.com) and India Bulls, most other online brokerages are an extension of brick-and-mortar broking.
As this combination is still a new concept, most investors will be better off clarifying how the offline environment will operate, if the online environment fails for any reason. For the investor, the important thing is to ensure that this switch from online to offline is seamless and that there are no associated hidden costs.
Unless the online trading volumes increase dramatically to 10-15 per cent of the total trading volumes (or at least 20 per cent of the gross turnover of the BSE and the NSE), the brick-and-mortar outfits will continue to dominate.
Success factors:
The pedigree of the e-broker: The pedigree of the e-broker is important as that is likely to identify the serious players. Going forward, consolidation is inevitable even in this industry and when that happens, online trading sites such as icicidirect.com, investsmart and kotakstreet.com with a good pedigree have a much better chance of survival than the stand-alone sites such as 5paisa.com and Indiabulls.
Technology and back-.office infrastructure: In these early months, online trading is likely to attract a host of entrants as India has already seen so far. But the key differentiator will be the investment in technology and back-office infrastructure. Even if small-time e-broking outfits make the initial investments in technology, the recurring expenses, which would also be high, may prove to a burden in the long run.
Quality of service and security: As the industry quickly consolidates and technology gets standardised, the quality of service will be the key differentiator. Basically, the investors do evaluate the quality of service and ``security-related issues'' (say, in terms of 128-bit encryption or privacy/confidentiality in access), between two outfits. In the long run, depending on the service levels, investors switch to the better player.
Integrated package: Currently, only icicidirect.com offers a seamless 3-in-1 package of broking, banking and demat accounts. This effectively means that through the click of a mouse, an investor can buy and sell shares, and forget about the paperwork involved in settlements and transfer of shares or money. The rest of the players are also putting such an integrated package in place, but icicidirect.com has a headstart as the others may be able to offer an seamless online trading experience only after an independent payment gateway (which provides connectivity between different banks for online banking) is firmly in place.
However, the existing online trading system suffers from a major lacunae. icicidirect.com currently offers online trading services only to investors who have a bank or a demat account with ICICI. Or, investors can open an online trading account with kotakstreet.com only if they open a demat account with Kotak Securities and have a bank account either with Citibank, HDFC Bank or Global Trust Bank. If investors do not have these accounts, they have to go through the entire rigmarole of opening up the bank and demat account again for easy operation. Apart from the hassles involved, there may also be certain extra charges involved in this exercise that may have to be built into the overall cost of online trading.
e-broking transaction charges 2000
ICICI Direct
Account opening charges: Rs 750 only. For accounts opened before March 31, 2000, the account opening charge of Rs 750 will be set off against the brokerage paid for all trades done till September 30, 2000.
Fee Structure:
Delivery trades:
Less than Rs 1 million per quarter: 0.85 per cent
Rs 1 million to Rs 5 million per quarter: 0.60 per cent
Rs 5 million to Rs 10 million per quarter: 0.50 per cent
Rs 10 million and above per quarter: 0.40 per cent
Intra-settlement trading: The same fee schedule applies for squaring off transactions, but the above brokerage is to be paid only for the first leg of the transaction.
Minimum size order: The minimum value of the trade is Rs 1,000 and the minimum commission is Rs 25 per trade inclusive of demat market transaction charges, service taxes and postage of contract note.
Banking: ICICI Bank only
Margin: 100 per cent
Offline broking: Option unavailable
Shortselling: In the offing
Demat: ICICI Bank, no extra charges
Sharekhan.com
Account opening charges: No fee charged for plan A and B. For plan C and D, a fee of Rs 500 is charged which will be adjusted against future trades.
Banking facility: HDFC or Global Trust Bank
Offline broking: option available
Minimum size order: none
Shortselling: option unavailable
Demat: SSKI, extra charges
Stamp duty, turnover tax and contingent charges extra as applicable: approximately Rs 25 per Rs 100,000
Fee Structure:
Plan A: Power-Asset Account
Rs 1,000 per month for intra-settlement. The value of trade is limited only by the cash in the account for purchases and by shares in the account for sale.
Plan B: Power-Leverage Account
The fee charged is Rs 1,000 per month with no limit on trading. Twenty-five per cent margin is required. The value of any individual trade can be as much as four times the margin in your account.
Plan C: Classic-Asset Account
The fee charged is 0.25 per cent of trade value. This is targeted at those who are not yet ready for flat fee-based investing. The value of trade is limited by the cash in the account for purchases and shares in the account for sale.
Plan D: Classic-Leverage Account
The fee charged is 0.10 per cent of trade value for intra-settlement trades. The value of any individual trade can be as much as four times the margin available in your account.
5paisa.com
Account opening charges: Rs 500 only
Intra-day: 0.05 per cent for each trade
Intra-settlement: 0.05 per cent for each trade
Delivery: 0.25 per cent
Banking facility: HDFC Bank
Margin: 25 per cent
Offline broking: Option unavailable
Shortselling: Available
Minimum size order: None
Demat: IIT Corporate Services, extra charges
Kotak Street.com
Account opening charges: Rs 500 only, which will be adjusted against future trades.
Margin: 33.33 per cent, minimum Rs 5,000.
Offline broking: Option unavailable
Banking: HDFC Bank, HSBC, Global Trust Bank, CitiBank, Standard Chartered, ABN Amro or Centurion.
Shortselling: Information unavailable
Minimum size order: Rs 1,000
Demat: Kotak Securities, no extra charges.
Fee structure
The Green Channel (Cash)
In this plan, one can trade up to three times the value of the margin with kotakstreet.com.
Delivery brokerage: 0.25 per cent.
Intra-settlement brokerage: 0.10 per cent payable for both legs of the transactions.
Intra-day brokerage: 0.10 per cent for the first leg only
Service charge and other levies: Nil
The Green Channel (Securities)
In this plan, traders can pay margin in the form of securities instead of cash.
Delivery brokerage: 0.25 per cent.
Intra-settlement brokerage: 0.10 per cent payable for both legs of the transactions.
Intra-day brokerage: 0.10 per cent for the first leg only
There is an additional transaction charge of 0.15 per cent per month on the value of the applicable limit.
Service charge and other levies: Nil
The Freeway
This scheme allows investors to trade at a flat fee of Rs 500 per month up to a maximum exposure limit of Rs 250,000.
The brokerage works out to 0.20 per cent.
Service charge and other levies: Extra
The Cash Expressway
This facility allows retail investors to sell their shares and collect the payment within 48 hours.
Delivery brokerage: 0.25 per cent and a transaction fee of 0.5 per cent on the sale value.
Service charge and other levies: Nil
Money
http://www.hinduonnet.com/businessline/iw/2000/09/03/stories/0703g051.htm
http://www.rediff.com/money/2000/aug/12spec.htm
---------------
April 2005
Customer based at the end of 2004
ICICIdirect.com
The online broking arm of ICICI Web Trade, an ICICI Bank subsidiary, commands 68 per cent of the total online trading market. Its customer base has grown from 300,000 last year to 550,000 today. It has 450 branches across India, and also covers Singapore and the Gulf.
The long-term plan is to graduate from being just an e-brokerage to a one-stop shop for personal finance products and services. The platform already sells health, home, overseas travel and life insurance products online. While you can pay online for general insurance products from ICICI Lombard, a physical follow-up from ICICI Pru representatives is necessary when buying life insurance products. The portal also enables online investing in postal savings instruments such as NSC and KVP. It has made CallNTrade available across 300 towns, allowing customers to use the phone to trade if they are unable to get online.
All bank transactions have to be through ICICI Bank– the direct connectivity between trading, demat and bank accounts makes transactions quicker and safer. ICICI direct is also the first broker in India to introduce Digitally Signed Contract Notes. The process has been automated and they are instantly and securely available online.
Indiabulls.com
The customer base of the next popular trading platform has increased about 40,000 in December 2003 to 63,000 today. The portal allows trading in equities, derivatives and mutual funds, besides offering insurance and loans online. It has 78 branches in 64 cities, and it hopes to double this number over the next year.
The site gives customers real-time data and prices, and analysis backed by powerful technology. Service is real-time with 24x7 access to all information on the portal. The company has a tie-up with HDFC Bank and ABN Amro Bank for banking, and clients are not bound to use a specific DP account. Indiabulls’ charges are competitive: 0.5 per cent of the order value for the cash segment and 0.1 per cent for derivatives.
------------ICICIDirect-------- India Bulls
No. of clients1---510,000-------------63,000
(As on 1 Dec 2004)
Brokerage (% of order value)
Cash segment---0.25 to 0.75% ------------- 0.50%
Intra-day------ 0.03-0.10%---------------- 0.10%
Derivatives----- 0.03-0.10%--------------- 0.10%
Sign-up fee (Rs-----) 750------------------ 700
http://www.outlookmoney.com/scripts/IIH021C1.asp?sectionid=10&categoryid=95&articleid=5593
----------------
October 2006
Innovations in online broking — flat fee structure spreading
The flat fee model charges the clients a fixed brokerage for a specified period, irrespective of the frequency or value of transactions.
So, if you are a very active trader, then flat fee broking products may suit you better.
ICICI's Offer
Monthly fixed rate Rs. 299
max quarterly free turnover: Rs.1,50,000
Brokerage above that amount: 0.6%
Monthly fixed rate Rs. 599
max quarterly free turnover: Rs.3,00,000
Brokerage above that amount: 0.6%
Monthly fixed rate Rs. 999
max quarterly free turnover: Rs.9,00,000
Brokerage above that amount: 0.5%
Kotak SEcurities offer
Monthly fixed rate Rs. 499
per transaction fee: Rs. 9;
Otherwise per transaction fee: Rs. 20; (delivery transaction size: Rs.5000)
In the Western markets, where almost 50 per cent of the cash market trades are done online, the success of the flat fee model can be attributed to the popularity of Internet trading.
In India, where an estimated 12-15 per cent of the total cash market volumes are done online, the flat fee regime has a long way to go. The products offered are still at a nascent stage and cater to the needs of a specific group of investors only.
Why the transition?
At a time when Internet broking is emerging as a popular trading tool, scalability and accessibility have become realistic goals for the broking houses. The broking industry is thus attracting a lot of new players. With such entrants as ABN AMRO Asia Equities, Religare and, the much talked about, R-Trade, competition is set to become tougher for the established players.
http://www.blonnet.com/iw/2006/10/08/stories/2006100800591300.htm
Online stock broking
Download article from
https://www.acs.org.au/Certification/Documents/EBus/2002EB1-StockBroking.pdf
Download a case from
http://www.blackwellpublishing.com/grant/5thEdition/docs/09On-lineBroking.pdf
Study of competition between full service brokers and online brokers - 2005
http://pages.stern.nyu.edu/~bakos/ebrokers.pdf
Download a case on Etrade - 2000
http://www.aect.cuhk.edu.hk/~ect7010/Materials/Assignment/ass1.pdf
https://www.acs.org.au/Certification/Documents/EBus/2002EB1-StockBroking.pdf
Download a case from
http://www.blackwellpublishing.com/grant/5thEdition/docs/09On-lineBroking.pdf
Study of competition between full service brokers and online brokers - 2005
http://pages.stern.nyu.edu/~bakos/ebrokers.pdf
Download a case on Etrade - 2000
http://www.aect.cuhk.edu.hk/~ect7010/Materials/Assignment/ass1.pdf
Response to Internet Broking Opportunity by Various Brokers
The short history of e-business includes many companies that were too rigid to respond quickly to the Web's disordering influence on their industries - and found themselves in a potentially unwinnable game of catch-up.
Initially deep discount brokers embraced online broking. Only after many years full service brokers changed to it.
Merrill Lynch & Company, for instance, resisted Web-based brokerage services for four years, while companies both new and extant, such as E-Trade, Charles Schwab and smaller discount brokers, stole its customers away by offering an efficient, inexpensive approach to buying and selling stocks. Merrill's public antipathy to the Internet was so strong that in August 1998 its vice chairman and brokerage chief, John "Launny" Steffens, said Internet trading "should be regarded as a serious threat to Americans' financial lives."
Merrill's paralysis, though, had nothing to do with protecting the citizenry; it was stoked by an internal culture clash. The company's powerful cadre of 15,000 brokers saw its commissions, which averaged nearly 30 percent of gross production, threatened by Internet trading and lobbied hard against it.
Merrill is far from the only high-profile company stymied by its own culture. When Amazon.com opened shop on the Internet in 1995, Barnes & Noble Inc., which had just gone through a feverish period of growth that included the debut of its innovative cafes and music shops within supersized bookstores, didn't take e-tailing seriously. Internally, the emphasis was so rooted in expanding the bricks-and-mortar chain that any other sales channel just didn't make the radar screen.
Merrill Lynch eventually had to cave in to the inexorable growth of online trading, even if its corporate culture wasn't ready to accept it. Last June, Merrill announced a complex plan that set Internet transaction fees at about $29.95 per trade, on a par with Charles Schwab.
Although Merrill has won plaudits for the quality of the online strategy it has disclosed, the company's halting approach to e-business is still hurting it. Its online trading site, which opened in December 1999, is not expected to be fully functional until mid-2000. Meanwhile, other Internet brokers continue to cement their presence on the Web, signing up new customers - some of them formerly Merrill's. To rally brokers around its Internet strategy, Merrill has agreed to pay them the commissions they lose from Web trading for the next five years, an amount that could total hundreds of millions of dollars.
Merrill's Internet delay is reminiscent of how the giant brokerage firm handled its significant business dislocation 25 years ago, when the U.S. Securities and Exchange Commission outlawed industry-wide fixed commissions. Merrill, like most of its competitors, used this as an opportunity to raise transaction fees. Schwab took the other route and slashed commissions, in effect creating the discount brokerage model. Schwab's idea was not unlike that adopted by Internet brokers: Attract customers with bargains on transactions, which are essentially commodities, and make money on volume as well as sales of initial public offerings, research reports, asset-allocation advice, mutual funds and, more recently, investment banking.
Merrill, meanwhile, held off cutting commissions for as long as it could. By the time Merrill launched its less-expensive Web-based trading programs, Schwab and numerous other discount brokers were well established - and much more efficient moneymakers. In 1998, Schwab's pre-tax profit margin was 18 percent, compared with only 9.5 percent for Merrill and 10.7 percent for the entire brokerage industry. Equally impressive, Schwab's return on invested capital was about five times the industry average, while Merrill's had fallen behind its competitors.
Schwab was far from the first broker to offer online trading - it started in 1996, about four years after E-Trade Securities Inc. pioneered the concept on the CompuServe online service - but unlike Barnes & Noble in its battle with Amazon.com, Schwab quickly outpaced its Internet rivals. Schwab's culture was prepared for change and not hardened against it. As the discount brokerage forerunner, Schwab was born from innovation: Its commission schedules were already tied to inexpensive trades, and it had extremely advanced, cost-effective networking technology that powered its vast telephone and electronic trading systems. These cultural and infrastructural strengths were indispensable in making its Web presence a success. Without hand-wringing and cultural resistance during its preparation to launch an Internet site, Schwab could focus on deploying an online trading system that would match customer expectations. Schwab has captured 42 percent of all assets traded online, even though its transaction price - $29.95 per trade - is among the highest in the category.
CHANNEL MANAGEMENT
Companies like Merrill Lynch that avoid alternative sales channels tend to lean on the same reason: They don't want to cannibalize their more lucrative existing business and wreak havoc on their pricing structures. Such companies see their current business as being under siege. Moreover, manufacturers - whether they make clothing, shoes, record albums or farm equipment - are also wary about upsetting their retailing or distribution partners by selling directly via the Internet.
FOCUS: LG SECURITIES
Fighting the Cannibals
by Glenn Rifkin
The explosive growth in online stock trading has not been a solely American phenomenon. As their economy rebounded in 1999, Koreans began to embrace online equity trading with a vengeance. With Korean stock prices rising, online commission rates plummeted through the first half of 1999. Despite these discounts, the value of trades placed online jumped from 5 percent of all trades in January to 30 percent in August 1999.
Korean consumers are now so enamored of online trading that many employers must limit Internet access in order to keep employees from playing the market all day.
LG Investments and Securities Company (LGS) has led the rush into the online trading world. With 90 branches and 1,900 employees, LGS is the $500 million brokerage services arm of the LG Group, one of Korea's largest conglomerates. Founded in 1969 and operating primarily in Korea, LG Securities is an unlikely company to have thrived in the fast-paced world of online trading. Growth over the past few years has been slow because LGS's C.E.O., Ho-Soon Oh, was reluctant to expand or hire new employees during the economic crisis that began in 1997, as were many of his competitors.
Despite a cautious corporate culture, Hong-Soop Song, an LG branch manager, saw a new market for the company in the burgeoning field of online trading. Because the Korean market was virgin territory, the first mover would undoubtedly enjoy a huge advantage. Why shouldn't it be LG Securities, he wondered. "Based on my knowledge of customer behavior as a branch manager, and my study of successful U.S. companies, such as E-Trade, I realized that online trading was a huge opportunity for us," Mr. Song says.
In November 1998, he presented Mr. Oh and C.F.O. Seong-Hyun Yoon with a proposal for a major online-trading initiative. He suggested a tenfold increase in spending on I.T. infrastructure for the online venture: New telecommunications lines and more powerful servers would be required. He also noted that the effort would require only a modest increase in employees, an attractive feature for executives who were loath to fire employees in another economic downturn. Mr. Oh and Mr. Yoon were so impressed by the proposal that they approved it in only two days - a miracle in a bureaucracy where major decisions usually take weeks or months - and allocated it a $15 million budget. The system was up and running one month later.
Beyond the speed of its development, LGS's online trading operation succeeded because it was convenient for customers. Because relatively few Koreans use the Internet from home, LGS targeted Korea's 15,000 cybercafe-like "PC Rooms," which offer high-speed online access for an hourly fee. LGS negotiated alliances with 700 PC Rooms, which eagerly promote LGS's trading services in the hope that they will increase their own revenues. LGS designed the online interface to be as simple as possible, and even dispatched staff to branch offices to explain the system and offer advice. Finally, LGS trumpeted the new service in a country-wide advertising blitz.
The initiative was not without obstacles. Unions are strong in Korea and the brokers' union protested that commissions would be cannibalized by online trading. When Mr. Song spoke with the union in November 1998, online commissions equalled those from the branches. But by January 1999, online commissions had dropped to a point a whopping 80 percent lower than branch trading commissions and the brokers feared for their livelihoods.
Mr. Song argued that since online trading was inevitable, it would be advantageous for the brokers if LGS got into the market first. Furthermore, he assured them that LGS was truly committed to the new venture and, in an attempt to sweeten the deal, he said LGS would tie brokers' income to online revenues: The more online trades placed, the more money the brokers would make.
One year later, the numbers have proved Mr. Song correct. Before the advent of online trading, LGS's 800,000 customers made about 40,000 trades per day in branches. Today, the number of trades has skyrocketed to 240,000 a day - with 40,000 still being placed at traditional branches. In the end, online trading didn't cannibalize LGS's income stream, but created an entirely new source of revenue by encouraging customers to place 200,000 more trades each day.
http://www.strategy-business.com/press/16635507/10516
Initially deep discount brokers embraced online broking. Only after many years full service brokers changed to it.
Merrill Lynch & Company, for instance, resisted Web-based brokerage services for four years, while companies both new and extant, such as E-Trade, Charles Schwab and smaller discount brokers, stole its customers away by offering an efficient, inexpensive approach to buying and selling stocks. Merrill's public antipathy to the Internet was so strong that in August 1998 its vice chairman and brokerage chief, John "Launny" Steffens, said Internet trading "should be regarded as a serious threat to Americans' financial lives."
Merrill's paralysis, though, had nothing to do with protecting the citizenry; it was stoked by an internal culture clash. The company's powerful cadre of 15,000 brokers saw its commissions, which averaged nearly 30 percent of gross production, threatened by Internet trading and lobbied hard against it.
Merrill is far from the only high-profile company stymied by its own culture. When Amazon.com opened shop on the Internet in 1995, Barnes & Noble Inc., which had just gone through a feverish period of growth that included the debut of its innovative cafes and music shops within supersized bookstores, didn't take e-tailing seriously. Internally, the emphasis was so rooted in expanding the bricks-and-mortar chain that any other sales channel just didn't make the radar screen.
Merrill Lynch eventually had to cave in to the inexorable growth of online trading, even if its corporate culture wasn't ready to accept it. Last June, Merrill announced a complex plan that set Internet transaction fees at about $29.95 per trade, on a par with Charles Schwab.
Although Merrill has won plaudits for the quality of the online strategy it has disclosed, the company's halting approach to e-business is still hurting it. Its online trading site, which opened in December 1999, is not expected to be fully functional until mid-2000. Meanwhile, other Internet brokers continue to cement their presence on the Web, signing up new customers - some of them formerly Merrill's. To rally brokers around its Internet strategy, Merrill has agreed to pay them the commissions they lose from Web trading for the next five years, an amount that could total hundreds of millions of dollars.
Merrill's Internet delay is reminiscent of how the giant brokerage firm handled its significant business dislocation 25 years ago, when the U.S. Securities and Exchange Commission outlawed industry-wide fixed commissions. Merrill, like most of its competitors, used this as an opportunity to raise transaction fees. Schwab took the other route and slashed commissions, in effect creating the discount brokerage model. Schwab's idea was not unlike that adopted by Internet brokers: Attract customers with bargains on transactions, which are essentially commodities, and make money on volume as well as sales of initial public offerings, research reports, asset-allocation advice, mutual funds and, more recently, investment banking.
Merrill, meanwhile, held off cutting commissions for as long as it could. By the time Merrill launched its less-expensive Web-based trading programs, Schwab and numerous other discount brokers were well established - and much more efficient moneymakers. In 1998, Schwab's pre-tax profit margin was 18 percent, compared with only 9.5 percent for Merrill and 10.7 percent for the entire brokerage industry. Equally impressive, Schwab's return on invested capital was about five times the industry average, while Merrill's had fallen behind its competitors.
Schwab was far from the first broker to offer online trading - it started in 1996, about four years after E-Trade Securities Inc. pioneered the concept on the CompuServe online service - but unlike Barnes & Noble in its battle with Amazon.com, Schwab quickly outpaced its Internet rivals. Schwab's culture was prepared for change and not hardened against it. As the discount brokerage forerunner, Schwab was born from innovation: Its commission schedules were already tied to inexpensive trades, and it had extremely advanced, cost-effective networking technology that powered its vast telephone and electronic trading systems. These cultural and infrastructural strengths were indispensable in making its Web presence a success. Without hand-wringing and cultural resistance during its preparation to launch an Internet site, Schwab could focus on deploying an online trading system that would match customer expectations. Schwab has captured 42 percent of all assets traded online, even though its transaction price - $29.95 per trade - is among the highest in the category.
CHANNEL MANAGEMENT
Companies like Merrill Lynch that avoid alternative sales channels tend to lean on the same reason: They don't want to cannibalize their more lucrative existing business and wreak havoc on their pricing structures. Such companies see their current business as being under siege. Moreover, manufacturers - whether they make clothing, shoes, record albums or farm equipment - are also wary about upsetting their retailing or distribution partners by selling directly via the Internet.
FOCUS: LG SECURITIES
Fighting the Cannibals
by Glenn Rifkin
The explosive growth in online stock trading has not been a solely American phenomenon. As their economy rebounded in 1999, Koreans began to embrace online equity trading with a vengeance. With Korean stock prices rising, online commission rates plummeted through the first half of 1999. Despite these discounts, the value of trades placed online jumped from 5 percent of all trades in January to 30 percent in August 1999.
Korean consumers are now so enamored of online trading that many employers must limit Internet access in order to keep employees from playing the market all day.
LG Investments and Securities Company (LGS) has led the rush into the online trading world. With 90 branches and 1,900 employees, LGS is the $500 million brokerage services arm of the LG Group, one of Korea's largest conglomerates. Founded in 1969 and operating primarily in Korea, LG Securities is an unlikely company to have thrived in the fast-paced world of online trading. Growth over the past few years has been slow because LGS's C.E.O., Ho-Soon Oh, was reluctant to expand or hire new employees during the economic crisis that began in 1997, as were many of his competitors.
Despite a cautious corporate culture, Hong-Soop Song, an LG branch manager, saw a new market for the company in the burgeoning field of online trading. Because the Korean market was virgin territory, the first mover would undoubtedly enjoy a huge advantage. Why shouldn't it be LG Securities, he wondered. "Based on my knowledge of customer behavior as a branch manager, and my study of successful U.S. companies, such as E-Trade, I realized that online trading was a huge opportunity for us," Mr. Song says.
In November 1998, he presented Mr. Oh and C.F.O. Seong-Hyun Yoon with a proposal for a major online-trading initiative. He suggested a tenfold increase in spending on I.T. infrastructure for the online venture: New telecommunications lines and more powerful servers would be required. He also noted that the effort would require only a modest increase in employees, an attractive feature for executives who were loath to fire employees in another economic downturn. Mr. Oh and Mr. Yoon were so impressed by the proposal that they approved it in only two days - a miracle in a bureaucracy where major decisions usually take weeks or months - and allocated it a $15 million budget. The system was up and running one month later.
Beyond the speed of its development, LGS's online trading operation succeeded because it was convenient for customers. Because relatively few Koreans use the Internet from home, LGS targeted Korea's 15,000 cybercafe-like "PC Rooms," which offer high-speed online access for an hourly fee. LGS negotiated alliances with 700 PC Rooms, which eagerly promote LGS's trading services in the hope that they will increase their own revenues. LGS designed the online interface to be as simple as possible, and even dispatched staff to branch offices to explain the system and offer advice. Finally, LGS trumpeted the new service in a country-wide advertising blitz.
The initiative was not without obstacles. Unions are strong in Korea and the brokers' union protested that commissions would be cannibalized by online trading. When Mr. Song spoke with the union in November 1998, online commissions equalled those from the branches. But by January 1999, online commissions had dropped to a point a whopping 80 percent lower than branch trading commissions and the brokers feared for their livelihoods.
Mr. Song argued that since online trading was inevitable, it would be advantageous for the brokers if LGS got into the market first. Furthermore, he assured them that LGS was truly committed to the new venture and, in an attempt to sweeten the deal, he said LGS would tie brokers' income to online revenues: The more online trades placed, the more money the brokers would make.
One year later, the numbers have proved Mr. Song correct. Before the advent of online trading, LGS's 800,000 customers made about 40,000 trades per day in branches. Today, the number of trades has skyrocketed to 240,000 a day - with 40,000 still being placed at traditional branches. In the end, online trading didn't cannibalize LGS's income stream, but created an entirely new source of revenue by encouraging customers to place 200,000 more trades each day.
http://www.strategy-business.com/press/16635507/10516
Schwab's CMO on Branding 2006
Becky Saeger, CMO, Charles Schwab
2. How does your marketing strategy embrace new forms of media that are constantly emerging? What are your perceptions about the use of traditional media in your marketing mix?
As we embarked on our new "Talk to Chuck" brand campaign, we believed that executional innovation -- especially in the context of financial services -- was crucial. All of our research and all of our insights and instincts told us that reaching our objectives of differentiation, relevance and emotional connections would require touching our target audience in the context of their lives. Our client, the "average" investor, doesn't bifurcate his or her life into chunks that they set aside for financial services -- "it's 6:00 on Thursday, it must be investing time. . . " She's thinking about it during her commute, when she's drinking coffee, when she's picking something up at the laundry, when she's thumbing through Gourmet Magazine or online checking the sports scores. So we've made a concerted effort to try to reach her there.
We're experimenting heavily with new approaches to online media that have proven to be very effective in building interest in Schwab. And we're also finding that traditional media--yes, TV and even outdoor--continue to be important in achieving the awareness and impact we want--but we have to look at the entire media mix and take advantage of the synergies.
3. One of the key platforms in the "reinvention equation" is marketing accountability. How does your increased focus on accountability influence your marketing decision making?
Creating accountability has been absolutely key. I think its one of the most important mandates for marketers in general, but when you add in the variable that we faced, which was a business that was struggling to regain its historical norm of very high financial performance, you had an environment where we were picking up pennies everywhere we saw them, and in that environment you have to be able to prove that marketing is an investment for growth, not an expense to be cut.
One of our objectives over the last two years has been to build a culture of accountability. It reaches every part of the marketing organization and also informs the basis on which we interact with our business partners. We've put considerable effort into strengthening our database management capabilities, investing in better tracking and analysis tools, putting in place rigorous metrics to help us establish baselines for all our decisions. We test and learn in a more careful way. For example, before launching "Talk To Chuck" nationally, we spent six months in test markets to assure that we had a winning formula. This last year, we worked with an outside consultant to help us develop a marketing investment optimization model, and we've lifted our planning and decision-making process to a fact-based level.
4. How have you created brand loyalty among your consumers and what are you doing to keep them coming back?
At its most basic, we think of brand loyalty as the attachment that our clients have to the brand--their willingness and desire to stick with us, bring their next piece of business to us, refer their friends and colleagues to us. Lots of that attachment is reinforced by what our clients see of us in the marketplace: Are our communications relevant and compelling? Do they give the impression of a place that you can trust, a place that you belong and would be proud to be associated with?
But more fundamentally, brand loyalty stems from the client experience, and so it is a shared challenge that all of us in the business focus on day in and day out. Over the last two years during our turnaround, we focused intensely on reconnecting with our clients by simplifying our business model to make it clear what we stood for, by cutting costs of doing business with us to assure a great value proposition, by making sure that we weren't overburdening clients with excessive mailings and cross selling, and by reinvesting heavily into improvements in the client experience. The business now lives and dies by measurements of client loyalty, and that drives every choice we make--whether you are answering the phone in a call center, developing a new product or writing a direct mail piece.
5. Earlier this year USA Today wrote an article about your new" Talk to Chuck" ad campaign and how it’s a departure from your usually humorous ads What made you decide to change your approach and why do you think it was successful?
Change itself is relatively easy, and there is always a temptation to try and work your way out of a bad situation by going with something new and different. I think the real paradox of what we've accomplished with "Talk to Chuck" and the reinvention of the brand is that we asked ourselves first, what is really true and abiding about this brand? What makes us different that our clients truly value and we never want to lose?
We've been around for over 30 years now and have built an incredible amount of brand equity over those years. What is the essence of that? Once we were confident we understood that, it wasn't a question of doing the next great thing, it was a question of bringing new life and a freshness and relevance to what was already there and great. I believe our execution is very creative and innovative and yes, it is designed to startle and attract attention and to have an element of sly humor... Most important, we want it to feel relevant to investors' mindsets, to connect at emotional levels. But at the same time it reestablishes the core of what we stand for: trust, customer centricity, being an advocate for the individual investor, and providing great value.
Sep 2006
http://ana.blogs.com/liodice/2006/09/qa_with_becky_s.html
2. How does your marketing strategy embrace new forms of media that are constantly emerging? What are your perceptions about the use of traditional media in your marketing mix?
As we embarked on our new "Talk to Chuck" brand campaign, we believed that executional innovation -- especially in the context of financial services -- was crucial. All of our research and all of our insights and instincts told us that reaching our objectives of differentiation, relevance and emotional connections would require touching our target audience in the context of their lives. Our client, the "average" investor, doesn't bifurcate his or her life into chunks that they set aside for financial services -- "it's 6:00 on Thursday, it must be investing time. . . " She's thinking about it during her commute, when she's drinking coffee, when she's picking something up at the laundry, when she's thumbing through Gourmet Magazine or online checking the sports scores. So we've made a concerted effort to try to reach her there.
We're experimenting heavily with new approaches to online media that have proven to be very effective in building interest in Schwab. And we're also finding that traditional media--yes, TV and even outdoor--continue to be important in achieving the awareness and impact we want--but we have to look at the entire media mix and take advantage of the synergies.
3. One of the key platforms in the "reinvention equation" is marketing accountability. How does your increased focus on accountability influence your marketing decision making?
Creating accountability has been absolutely key. I think its one of the most important mandates for marketers in general, but when you add in the variable that we faced, which was a business that was struggling to regain its historical norm of very high financial performance, you had an environment where we were picking up pennies everywhere we saw them, and in that environment you have to be able to prove that marketing is an investment for growth, not an expense to be cut.
One of our objectives over the last two years has been to build a culture of accountability. It reaches every part of the marketing organization and also informs the basis on which we interact with our business partners. We've put considerable effort into strengthening our database management capabilities, investing in better tracking and analysis tools, putting in place rigorous metrics to help us establish baselines for all our decisions. We test and learn in a more careful way. For example, before launching "Talk To Chuck" nationally, we spent six months in test markets to assure that we had a winning formula. This last year, we worked with an outside consultant to help us develop a marketing investment optimization model, and we've lifted our planning and decision-making process to a fact-based level.
4. How have you created brand loyalty among your consumers and what are you doing to keep them coming back?
At its most basic, we think of brand loyalty as the attachment that our clients have to the brand--their willingness and desire to stick with us, bring their next piece of business to us, refer their friends and colleagues to us. Lots of that attachment is reinforced by what our clients see of us in the marketplace: Are our communications relevant and compelling? Do they give the impression of a place that you can trust, a place that you belong and would be proud to be associated with?
But more fundamentally, brand loyalty stems from the client experience, and so it is a shared challenge that all of us in the business focus on day in and day out. Over the last two years during our turnaround, we focused intensely on reconnecting with our clients by simplifying our business model to make it clear what we stood for, by cutting costs of doing business with us to assure a great value proposition, by making sure that we weren't overburdening clients with excessive mailings and cross selling, and by reinvesting heavily into improvements in the client experience. The business now lives and dies by measurements of client loyalty, and that drives every choice we make--whether you are answering the phone in a call center, developing a new product or writing a direct mail piece.
5. Earlier this year USA Today wrote an article about your new" Talk to Chuck" ad campaign and how it’s a departure from your usually humorous ads What made you decide to change your approach and why do you think it was successful?
Change itself is relatively easy, and there is always a temptation to try and work your way out of a bad situation by going with something new and different. I think the real paradox of what we've accomplished with "Talk to Chuck" and the reinvention of the brand is that we asked ourselves first, what is really true and abiding about this brand? What makes us different that our clients truly value and we never want to lose?
We've been around for over 30 years now and have built an incredible amount of brand equity over those years. What is the essence of that? Once we were confident we understood that, it wasn't a question of doing the next great thing, it was a question of bringing new life and a freshness and relevance to what was already there and great. I believe our execution is very creative and innovative and yes, it is designed to startle and attract attention and to have an element of sly humor... Most important, we want it to feel relevant to investors' mindsets, to connect at emotional levels. But at the same time it reestablishes the core of what we stand for: trust, customer centricity, being an advocate for the individual investor, and providing great value.
Sep 2006
http://ana.blogs.com/liodice/2006/09/qa_with_becky_s.html
Wednesday, November 21, 2007
Fidelity Brokerage 2007 Performance
Fidelity Investments Announces Third-Quarter Brokerage Results
THIRD-QUARTER 2007 BROKERAGE RESULTS:
• Fidelity Investments today announced total brokerage client assets reached a record $1.96 trillion, a 24% increase from one year ago. The company attributed the growth to increased net flows across all three brokerage units, as well as market activity.
• Daily average commissionable trades rose 31% to a record 368,502 in the third quarter compared to the third quarter of 2006.
• Fidelity's net new client assets, which include sales of Fidelity and non-Fidelity mutual funds and individual securities, grew 97% to $54.8 billion, and total client accounts rose 6% to 17.6 million in the third quarter compared to one year ago.
YEAR-TO-DATE BROKERAGE RESULTS:
• Through September 30, 2007, the firm saw growth across all of its brokerage units, with net new client assets of $142.6 billion, up 19% compared to the first nine months of 2006. Net new client assets for the Institutional Advisor business rose 168% during the period, due to several new client implementations and the continuing success of its SunGard alliance, which enables bank trust and retirement plan administrator clients access to an integrated brokerage and trust platform.
• The firm's Retail Brokerage unit continued to see healthy growth, attracting $48 billion in net new client assets, down about 2% from the $48.9 billion added during the same period in 2006.
• The Institutional Clearing unit added $29 billion in net new client assets, down 37% compared to the same period in 2006. The decrease in net new client assets at the firm's Institutional Clearing unit was largely a result of a number of client implementations in 2006 that were not repeated in the first nine months of this year.
HIGHLIGHTS OF Q3 INITIATIVES:
•
• In September, Fidelity and SunGard enhanced their integrated trading and custody trading platform by offering new services, including a directed trustee services program, a payment and reporting program for brokers who support retirement plans, and an online revenue management tool. The enhancements will help trust institution and third party administrator customers meet the growing wealth management and retirement planning needs of their clients.
• In September, Fidelity Registered Investment Advisor Group was renamed Fidelity Institutional Wealth Services. Although Registered Investment Advisors currently make up a majority of the business, the change recognizes the evolving role trust institutions and third party administrators also play in meeting the wealth management needs of investors.
• In August, Fidelity launched mySmart Cash AccountSM, a cash management brokerage account that offers customers interest rates currently seven times the national average, rebated ATM fees, no account minimums and online bill payment. MySmart Cash customers can also take advantage of mySmart Cash Manager, a cash management tool that links to a Fidelity investment account or an outside bank account to allow automatic movement of cash to mySmart Cash when needed, and can alert customers when they have extra cash they can actively invest.
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $3.3 trillion, including managed assets of more than $1.5 trillion as of September 30, 2007. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to more than 23 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
100 Summer Street, Boston, MA 02110
National Financial Services LLC, Member NYSE, SIPC
200 Liberty Street, NY4F, New York, NY 10281
http://content.members.fidelity.com/Inside_Fidelity/fullStory/1,,7515,00.html
------------
THIRD-QUARTER 2007 BROKERAGE RESULTS:
• Fidelity Investments today announced total brokerage client assets reached a record $1.96 trillion, a 24% increase from one year ago. The company attributed the growth to increased net flows across all three brokerage units, as well as market activity.
• Daily average commissionable trades rose 31% to a record 368,502 in the third quarter compared to the third quarter of 2006.
• Fidelity's net new client assets, which include sales of Fidelity and non-Fidelity mutual funds and individual securities, grew 97% to $54.8 billion, and total client accounts rose 6% to 17.6 million in the third quarter compared to one year ago.
YEAR-TO-DATE BROKERAGE RESULTS:
• Through September 30, 2007, the firm saw growth across all of its brokerage units, with net new client assets of $142.6 billion, up 19% compared to the first nine months of 2006. Net new client assets for the Institutional Advisor business rose 168% during the period, due to several new client implementations and the continuing success of its SunGard alliance, which enables bank trust and retirement plan administrator clients access to an integrated brokerage and trust platform.
• The firm's Retail Brokerage unit continued to see healthy growth, attracting $48 billion in net new client assets, down about 2% from the $48.9 billion added during the same period in 2006.
• The Institutional Clearing unit added $29 billion in net new client assets, down 37% compared to the same period in 2006. The decrease in net new client assets at the firm's Institutional Clearing unit was largely a result of a number of client implementations in 2006 that were not repeated in the first nine months of this year.
HIGHLIGHTS OF Q3 INITIATIVES:
•
• In September, Fidelity and SunGard enhanced their integrated trading and custody trading platform by offering new services, including a directed trustee services program, a payment and reporting program for brokers who support retirement plans, and an online revenue management tool. The enhancements will help trust institution and third party administrator customers meet the growing wealth management and retirement planning needs of their clients.
• In September, Fidelity Registered Investment Advisor Group was renamed Fidelity Institutional Wealth Services. Although Registered Investment Advisors currently make up a majority of the business, the change recognizes the evolving role trust institutions and third party administrators also play in meeting the wealth management needs of investors.
• In August, Fidelity launched mySmart Cash AccountSM, a cash management brokerage account that offers customers interest rates currently seven times the national average, rebated ATM fees, no account minimums and online bill payment. MySmart Cash customers can also take advantage of mySmart Cash Manager, a cash management tool that links to a Fidelity investment account or an outside bank account to allow automatic movement of cash to mySmart Cash when needed, and can alert customers when they have extra cash they can actively invest.
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $3.3 trillion, including managed assets of more than $1.5 trillion as of September 30, 2007. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to more than 23 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.
Fidelity Brokerage Services LLC, Member NYSE, SIPC
100 Summer Street, Boston, MA 02110
National Financial Services LLC, Member NYSE, SIPC
200 Liberty Street, NY4F, New York, NY 10281
http://content.members.fidelity.com/Inside_Fidelity/fullStory/1,,7515,00.html
------------
Fidelity Broking Strategy - Better Performance than Schwab
July 2007
Moving beyond customer satisfaction
Fidelity is moving beyond customer satisfaction: customer success.
What is customer success? Not being satisfied with how well you did yesterday and looking in the opposite direction: thinking about how an individual can reach a goal.
In Ellyn's view, most consumers are setting goals with four big factors in mind: buying a house, educating children, planning for retirement, and taking care of elderly parents. Starting with investors and offering products to help them make next best decisions on the way means customer success, both for the individual and the company.
Looking forward, Ellyn McColgan (Head of Fidelity Brokerage)sees 3 major changes for the brokerage industry in the next 10 years:
- Fee structures change to account for "de-cumulation," i.e. distribution of wealth
- Globalization - wealth is increasingly created outside of the U.S.
- Entitlements - system needs to change or else there won't be money left to invest in anything.
http://blogs.forrester.com/marketing/2007/06/fidelity-invest.html
--------
2006
About Fidelity Brokerage Company
Fidelity Brokerage Company, the nation's largest brokerage firm by assets and accounts, with an estimated $1.7 trillion in assets under administration{as on Dec 31, 06), provides investment products, services and technology to 11.0 million retail accounts, nearly 3,450 registered investment advisors and more than 340 broker/dealers and their 78,000 brokers. As of December 31, 2006, it served 17.1 million client accounts, had 114 investor centers nationwide and executed 306,000 daily average commissionable trades.
Year end 2006 Results
BOSTON, January 24, 2007- Fidelity Investments today announced fourth-quarter and year-end 2006 results for Fidelity Brokerage Company, which showed that total client assets at the end of 2006 set a company record at nearly $1.7 trillion, an increase of 21 percent from one year ago.
Additionally, net new client assets, which include sales of Fidelity and non-Fidelity mutual funds and individual securities, were up 24 percent, rising to $44.2 billion in the fourth quarter of 2006, when compared to $35.7 billion in the fourth quarter of 2005.
Daily average commissionable trades increased to 313,048, up 14 percent from 275,075 in the fourth quarter of 2005. Additionally, total client accounts in the fourth quarter were 17.1 million, up 3 percent when compared to the same period in 2005.
"2006 was a year of record-breaking levels for all of our businesses, whether looking at assets, retail flows, daily average commissionable trades or total client accounts," said Ellyn A. McColgan, president, Fidelity Brokerage Company, the nation's largest brokerage firm by assets and accounts. "Three critical drivers of this success were Fidelity's emphasis on retirement services, which increased this past year's retirement flows by 40 percent, the creation of powerful, new alliances in our intermediary businesses and enhancements to our retail brokerage offering."
Full-Year Results
For the 12 months ended December 31, 2006, Fidelity Brokerage Company reported that daily average commissionable trades were 305,979, an increase of 19 percent from 256,723 during the prior year. Net new client assets were $164.4 billion, compared with $194.4 billion, a decrease of 15 percent, resulting from several large, one-time intermediary client implementations during 2005.
Retail Brokerage
Fidelity Personal Investments (FPI) launched several initiatives during 2006 that increased the competitiveness of its overall offering for individual investors and contributed to the business reaching a record $65 billion in retail flows, an increase of 50 percent over the prior year.
In the fourth quarter of 2006, FPI made significant enhancements across all its 529 Plans, including the new California 529, which now feature greater investment choice, lower fees and expenses, extensive no-cost guidance, and education for direct investors. The firm also launched the Trading Knowledge Center, an innovative online multimedia trading education tool designed to help a range of investors, from the experienced to the novice, make more informed trading decisions.
In 2006, FPI also made significant enhancements to its Open Bond Market online site and active trader1 application Wealth-Lab Pro®.
Fidelity continued its focus on retirement with the introduction of a cross-company guidance program-myPlanSM-designed to help individual investors break through the inertia associated with retirement planning and savings and take actionable steps towards achieving their financial goals.
Institutional Advisor
In the fourth quarter of 2006, Fidelity Registered Investment Advisor Group (FRIAG) worked together with Fidelity Personal Investments, the firm's retail brokerage business, to introduce Wealth Advisor SolutionsSM. As an extension of Fidelity's wealth management services, the program expands the opportunity for high-net-worth customers to establish relationships with qualified, independent registered investment advisor (RIA) clients of Fidelity.
FRIAG also added 453 new clients throughout the year. Fidelity Brokerage Company established an exclusive agreement with SunGard Transaction Network to integrate Fidelity's brokerage services with SunGard's transactional processing capabilities. The joint offering set a new standard in the bank trust and retirement plan administrator markets for an integrated trust-brokerage platform. The agreement helps Fidelity Brokerage Company deliver a fullservice solution that can help institutional clients drive operational efficiencies, while also helping them more effectively meet the evolving investment management needs of their clients.
Institutional Clearing
In the fourth quarter of 2006, National Financial continued its focus on delivering Integrated Brokerage SolutionsSM to its broker/dealer clients to help them drive growth, create operating efficiencies and manage risk. As a part of these efforts, National Financial announced the creation of Service Center, an innovative service technology delivered through its Streetscape® workstation. The new online resource offers broker/dealers service resolution, tracking and reporting capabilities designed to help them gain greater control and quicken the pace of client service. The firm also introduced an imaging platform which allows brokerage firms and their registered reps to more efficiently store, manage and view account documents.
In addition, National Financial conducted its second annual Broker Sentiment IndexSM, an extensive measurement of U.S. brokers' career satisfaction, designed to assist broker/dealer clients with their efforts to attract and retain the most talented brokers. In 2006, National Financial grew client assets by $104 billion (19.1 percent) to $649 billion.
As part of an ongoing effort to offer its brokerage company clients the advanced solutions needed to execute successful trading strategies, Fidelity Brokerage Company introduced CrossStreamSM, a sophisticated alternative trading system (ATS) in the fourth quarter. CrossStream anonymously matches brokerage clients' buy and sell orders against the diverse order flow of the entire Fidelity Brokerage Company. Fidelity Brokerage Company also established an alliance with JPMorgan Chase & Co. earlier in 2006 that enables Fidelity's retail and institutional brokerage clients to participate in equity IPO and follow-on issues offered by JP Morgan.
http://content.members.fidelity.com/Inside_Fidelity/fullStory/1,,7394,00.html
----------------
APRIL 2005
Fidelity Investments' Internet operation has turned up the pressure on rivals such as Charles Schwab and even Merrill Lynch
Operating almost entirely online, it has added more than 1 million retail accounts in the past two years, giving it 9.9 million customers at the end of 2004. That's 40% more than Charles Schwab (SCH ) and 10% more than even Merrill Lynch (MER ).
Fidelity ended the year with $1.13 trillion in assets in its customers' brokerage accounts, muscling aside Schwab for the first time and closing in on Merrill's $1.36 trillion.
Fidelity's renewed assault on the industry's leaders began in October, 2002, when it tapped a 12-year company veteran, Ellyn McColgan, to run the brokerage unit. She trimmed costs, spent millions to upgrade the Web site for retail customers, and launched a series of ruthless price cuts. Fidelity now charges customers who make 120 trades a year just $8 a pop, vs. $14 for customers making 240 trades when she took over.
They spent a lot of money to upgrade their technology and improve customer service and after all that was in place they came up with the price cuts, the media campaign, the conference calls. Last year, it spent $700 million on technology alone at the brokerage unit.
The onslaught has other online brokers scrambling. In just two years, Schwab has lost almost 10% of its brokerage accounts, and E*trade Financial Corp. (ET ) 20% of its accounts. The losses have forced both to cut staff and close offices. The price cuts have been so harsh -- Schwab's average commission per trade fell 43% from 2002 to 2004 and continues to fall this year -- that some analysts say online brokerages are rapidly becoming unprofitable.
Most of McColgan's (since 2002)turnaround strategy came right from the playbook of Edward "Ned" Johnson III, who has run Fidelity since 1972. His philosophy: Spend and spend to improve technology and customer service, and emphasize market share first and profits later.
To attract frequent traders, McColgan purchased Wealth-Lab, a software program used to develop trading strategies, and added a dozen outside research sources to its Web site. The site not only offers reports from firms such as Lehman and Prudential Equity Group but also rates how accurate their past stock picks have been. McColgan also began adding branches around the country, opening 10 last year, including 6 within a half-mile of a Schwab office.
She also did something uncharacteristic of Fidelity: She spent more than $500 million on an acquisition spree. That beefed up its brokerage services for institutions and helped the firm gain ground on Bank of New York's Pershing, the market leader in terms of clients. Fidelity has vaulted over Goldman Sachs and Bear Stearns by adding clients such as Northern Trust, Washington Mutual, and Bank of America.
Now McColgan is focusing on Fidelity's failure to make much headway with financial advisers. In January she decided to replace the longtime head of the advisory business, Jay Lanigan, a 25-year Fidelity veteran. Over the previous two years, his operation had doubled the amount of assets it handled, to $137 billion. But Schwab had collected much more and now boasts $348 billion.
McColgan says she's looking to hire someone who will "bring a burst of energy" and close the "big fat lead" Schwab has built up. To catch Schwab, Fidelity will spend "a lot more" to boost its service for advisers, she adds. Recently, Fidelity introduced Web software -- for advisers -- that combines customer portfolio and contact information with trading and planning tools.
The battle to win over financial advisers and attract the assets of their clients is crucial to staying on top in the brokerage business. That's because each adviser brings in hundreds of accounts, and offering advice is the fastest-growing part of the investment industry. The long bear market and the host of scandals embroiling brokers and fund firms are driving the trend. And most advisers use a brokerage firm to maintain their customers' accounts and execute trades.
As Schwab has bulked up its own staff of advisers, Fidelity has been able to sign up some newer and smaller advisory firms that are worried about competing against Schwab for clients. But Fidelity is finding it much harder to get more established advisers to switch firms. To do so, the adviser must seek approval from each client, and many don't want to move.
Frank Armstrong, who runs a $300 million advisory company in Coconut Grove, Fla., has long used Schwab, but he's nervous about its growing in-house business. He's having Fidelity handle some of his clients' accounts, but many other clients resist switching. "Twice a year we tell them that there are better, more economical choices, but they want to stay," he says. Schwab says its success at attracting more business from advisers belies the notion that it is seen as a competitor.
Armstrong says Schwab has even tried to poach some of his customers when they visited a branch. Schwab says staffers are trained to steer customers to the most appropriate adviser, including one of the 329 independents who make up part of Schwab's outside network. Schwab referred more than $6 billion of business last year to these independent advisers. But fewer than 7% of the roughly 5,000 advisers who keep client assets at Schwab got referrals. Schwab says more want to join than it can accommodate.
This fight over financial advisers might determine which firm wins online brokerage supremacy. For now, Fidelity's vast resources and freedom from the tyranny of hitting quarterly earnings numbers are giving the mutual-fund giant an important edge.
http://www.businessweek.com/bwdaily/dnflash/apr2005/nf2005047_2278_db016.htm
-------------------
June 2005:
Fidelity Retirement Survey
Findings from the Fidelity Retirement Index issued Tuesday show that the typical American household is on track to replace approximately 59 percent of its projected pre-retirement income.
Since the index uses the median, or midpoint value from the findings, that means an equal number of respondents will do better or worse than 59 percent.
Fidelity recommends households be prepared to replace at least 85 percent of their pre-retirement income.
That means if a household earns $100,000 annually, it should be prepared to generate at least $85,000 a year during retirement.
Younger American workers aged 25 to 40 -- the least prepared age group in the survey -- are on track to replace about 55 percent of their pre-retirement earnings, the survey found.
Workers aged 41 to 54 are the best prepared and can expect to replace about 63 percent of their pre-retirement income, and those aged 55 and older trail slightly behind and are on track to replace about 62 percent.
"The harsh reality is that many Americans are woefully unprepared for retirement. They simply aren't saving anywhere near enough -- and many are not investing their retirement savings wisely," Fidelity Brokerage Company President Ellyn A. McColgan, told an audience
Bumping up personal savings
The Fidelity survey found that the typical American household has saved $18,750 for retirement and expects to cover the majority of retirement costs through Social Security and pension benefits.
But with rising retiree medical costs and longer anticipated life spans, Americans need to bump up their personal savings if they want to be ready for retirement, Fidelity said.
Some 16 percent of working Americans haven't even started saving for retirement, the survey found.
For those who have started saving, younger adults aged 25 to 40 typically put away $92 a month for retirement and have saved $9,000, while adults between the ages of 41 and 54 have saved more than $30,000. Their monthly contributions are double that of their younger counterparts at $187, according to the index.
Pre-retirees aged 55 and older typically have $60,000 in retirement savings and contribute $229 each month to that goal, according to the results of the survey.
McColgan also said companies need to play a larger role in demystifying the retirement planning process and encouraged retirement plan sponsors to provide education and guidance as well as automate enrollment process so workers can fully participate in company-sponsored plans.
More than 1,900 households with full-time workers above the age of 25 earning $20,000 or more a year were interviewed for the survey.
http://money.cnn.com/2005/06/07/retirement/fidelity_retirement/
-----------------
2003
A Conversation with Fidelity President Ellyn McColgan
February 12, 2003
She rises to the post from her previous role of president of Fidelity Financial Intermediary Services, succeeding Kevin Kelly. Her new role entails management of Fidelity's vast retail- and institutional-brokerage operations, as well as its direct mutual-fund sales. FBC is comprised of Fidelity Personal Investments, Fidelity Institutional Brokerage Group, and Brokerage Operations and Technology. Fidelity Investment's 2003 technology budget is $2 billion, which is unchanged from 2002.
What do you consider the largest challenge of your new position?
McColgan: Re-inspiring customers and our own employees about the market. Investors have been through a rough couple of years and we need to reach out to them with a message that is fresh and inspiring about the possibilities that are still available to people. But, it's not just about investors. It's about employees in the financial-services industry as well, including our advisers and representatives in our investor centers. Basically, everybody in financial services is pretty worn out after three years of a down cycle.
the Brokerage Operations and Technology Group. What are your top priorities for the Brokerage Operations and Technology Group?
McColgan: There are three priorities. One would be productivity improvements in the technology that supports the foundation of our business - in other words improving existing technology. The second is focusing on how to make the technology work even better for customer service. The third is to identify the top two or three opportunities for market innovation in technology.
Can I say just a couple of words about those three things? Let me start with productivity. We are a big company, we process lots of transactions, we have millions of customers, so the basic production systems that we run every day need to be maintained and run as cost effectively as possible. That's all the behind-the-scenes work that takes thousands of people to do. We never write any ink about it, if you will, but we spend a lot of time and energy there.
The second is customer service. Our customers deal with us in any number of different ways - all of which use technology. We need to make all of those customer-facing systems as user friendly as possible, and we need to have the standard of service for customers be the same across all of those platforms, no matter how you do business with us. That's much easier said than done.
The third thing that is very important to us as a company, with all the money that we spend on technology, is to identify those things that will truly separate us in the market for innovation. The most obvious example of that would be our ActiveTrader Pro Web site (a direct-access Web application for people who trade more than 36 times a year, developed in 2002).
You mentioned getting closer to your customers, what technology are you using to do that?
McColgan: The answered is layered. Customers either deal with us on the phone, through our Web site or in person. Our philosophy, over the years, has been to build the same capability across all those platforms - whether you came in through a branch or via the phone - you could do the same transactions.
What we find now, in fact, ten years later, after investing in all of these things, is that customers use the technologies for different things and we have to be smart enough to know what outlets are used for what types of transactions.
... Oh, I'll give you an example: Remember, years ago, when voice- response systems were considered the best technology around? What we did was build these really complicated trees so that you could go off and do any transaction you wanted to do. Well, now that would drive you crazy, you would never do that. Now about 80 to 90 percent of calls on voice response are for balance and quotes, so now we use voice response for balance and quotes. You know, so simplify it so it is easily accessible
What is Fidelity doing to comply with the new Patriot Act?
McColgan: Fidelity has established an Anti-Money Laundering Office to set consistent policy across all its business units. Among other things, we are: providing computer-based anti-money laundering training to all appropriate employees; performing due diligence concerning foreign financial institutions, including required certifications from foreign banks; and enhancing our suspicious-activity investigation and reporting capabilities, both for our own businesses and our correspondent broker/dealer clients.
Considering Fidelity's vast brokerage force, how does the firm monitor and archive e-mails and instant messages to comply with document-retention rules?
McColgan: We have systems in place for Fidelity's brokerage company to comply with document-retention rules. We also continually monitor and assess our technology and processes, and we continually upgrade and enhance our systems' capabilities to fulfill customer-service, operational and regulatory requirements.
How do you work with your technology group? Does the CIO or CTO report directly to you?
McColgan: Yes, the head of all brokerage technology reports directly to me and he manages the development across all of our businesses and all of our platforms. So, for example, whether it is regarding the Web or voice response or the mainframe, it all reports into one person and we do have a consolidated budget. There is another technology group for Fidelity.com, which is a separate tech group that does not report in to me, but we coordinate all Fidelity.com development with them.
Fidelity has been a leader in the wireless area in financial services, and now wireless has taken a little bit of a backseat, at least at most firms. What is your wireless vision for financial services - are you going to continue to support wireless or pull back from it?
McColgan: I think we are going to continue to invest in wireless as a technology of the future, but I think it is fair to say that it did not play out as we all thought that it would. Remember the advertisements showing investors running to and from meetings doing stock trades on their telephones? I don't think that is what has happened, but virtually everyone I know carries a wireless device of some sort for all kinds of communications purposes, whether or not they are doing trades on it is probably irrelevant.
The simple truth is that we are always in touch with each other and our customers, if we need to be, via all kinds of outlets, therefore I think wireless will always have potential. I think all of us who supported wireless early - as with all of the new technology in the last five years - we learned a lot, and it may evolve into something other than what we expected but I don't think the technology is going to go away.
http://www.financetech.com/showArticle.jhtml?articleID=14701970
-------------------
2003 January
McColgan Named Fidelity Brokerage President
A 20-year financial service industry veteran has been named president of Fidelity Brokerage Co.
Ellyn A. McColgan, who has been with Fidelity since 1990, was named to head the company, where she will manage Fidelity’s retail and institutional brokerage operations, and direct mutual fund sales. Fidelity Brokerage Company includes Fidelity Personal Investments, Fidelity Institutional Brokerage Group and Brokerage Operations and Technology, which manages more than 16 million accounts and holds nearly $700 billion in client assets.
http://www.fa-mag.com/past_issues.php?id_content=3&idPastIssue=67&show=fronline
Moving beyond customer satisfaction
Fidelity is moving beyond customer satisfaction: customer success.
What is customer success? Not being satisfied with how well you did yesterday and looking in the opposite direction: thinking about how an individual can reach a goal.
In Ellyn's view, most consumers are setting goals with four big factors in mind: buying a house, educating children, planning for retirement, and taking care of elderly parents. Starting with investors and offering products to help them make next best decisions on the way means customer success, both for the individual and the company.
Looking forward, Ellyn McColgan (Head of Fidelity Brokerage)sees 3 major changes for the brokerage industry in the next 10 years:
- Fee structures change to account for "de-cumulation," i.e. distribution of wealth
- Globalization - wealth is increasingly created outside of the U.S.
- Entitlements - system needs to change or else there won't be money left to invest in anything.
http://blogs.forrester.com/marketing/2007/06/fidelity-invest.html
--------
2006
About Fidelity Brokerage Company
Fidelity Brokerage Company, the nation's largest brokerage firm by assets and accounts, with an estimated $1.7 trillion in assets under administration{as on Dec 31, 06), provides investment products, services and technology to 11.0 million retail accounts, nearly 3,450 registered investment advisors and more than 340 broker/dealers and their 78,000 brokers. As of December 31, 2006, it served 17.1 million client accounts, had 114 investor centers nationwide and executed 306,000 daily average commissionable trades.
Year end 2006 Results
BOSTON, January 24, 2007- Fidelity Investments today announced fourth-quarter and year-end 2006 results for Fidelity Brokerage Company, which showed that total client assets at the end of 2006 set a company record at nearly $1.7 trillion, an increase of 21 percent from one year ago.
Additionally, net new client assets, which include sales of Fidelity and non-Fidelity mutual funds and individual securities, were up 24 percent, rising to $44.2 billion in the fourth quarter of 2006, when compared to $35.7 billion in the fourth quarter of 2005.
Daily average commissionable trades increased to 313,048, up 14 percent from 275,075 in the fourth quarter of 2005. Additionally, total client accounts in the fourth quarter were 17.1 million, up 3 percent when compared to the same period in 2005.
"2006 was a year of record-breaking levels for all of our businesses, whether looking at assets, retail flows, daily average commissionable trades or total client accounts," said Ellyn A. McColgan, president, Fidelity Brokerage Company, the nation's largest brokerage firm by assets and accounts. "Three critical drivers of this success were Fidelity's emphasis on retirement services, which increased this past year's retirement flows by 40 percent, the creation of powerful, new alliances in our intermediary businesses and enhancements to our retail brokerage offering."
Full-Year Results
For the 12 months ended December 31, 2006, Fidelity Brokerage Company reported that daily average commissionable trades were 305,979, an increase of 19 percent from 256,723 during the prior year. Net new client assets were $164.4 billion, compared with $194.4 billion, a decrease of 15 percent, resulting from several large, one-time intermediary client implementations during 2005.
Retail Brokerage
Fidelity Personal Investments (FPI) launched several initiatives during 2006 that increased the competitiveness of its overall offering for individual investors and contributed to the business reaching a record $65 billion in retail flows, an increase of 50 percent over the prior year.
In the fourth quarter of 2006, FPI made significant enhancements across all its 529 Plans, including the new California 529, which now feature greater investment choice, lower fees and expenses, extensive no-cost guidance, and education for direct investors. The firm also launched the Trading Knowledge Center, an innovative online multimedia trading education tool designed to help a range of investors, from the experienced to the novice, make more informed trading decisions.
In 2006, FPI also made significant enhancements to its Open Bond Market online site and active trader1 application Wealth-Lab Pro®.
Fidelity continued its focus on retirement with the introduction of a cross-company guidance program-myPlanSM-designed to help individual investors break through the inertia associated with retirement planning and savings and take actionable steps towards achieving their financial goals.
Institutional Advisor
In the fourth quarter of 2006, Fidelity Registered Investment Advisor Group (FRIAG) worked together with Fidelity Personal Investments, the firm's retail brokerage business, to introduce Wealth Advisor SolutionsSM. As an extension of Fidelity's wealth management services, the program expands the opportunity for high-net-worth customers to establish relationships with qualified, independent registered investment advisor (RIA) clients of Fidelity.
FRIAG also added 453 new clients throughout the year. Fidelity Brokerage Company established an exclusive agreement with SunGard Transaction Network to integrate Fidelity's brokerage services with SunGard's transactional processing capabilities. The joint offering set a new standard in the bank trust and retirement plan administrator markets for an integrated trust-brokerage platform. The agreement helps Fidelity Brokerage Company deliver a fullservice solution that can help institutional clients drive operational efficiencies, while also helping them more effectively meet the evolving investment management needs of their clients.
Institutional Clearing
In the fourth quarter of 2006, National Financial continued its focus on delivering Integrated Brokerage SolutionsSM to its broker/dealer clients to help them drive growth, create operating efficiencies and manage risk. As a part of these efforts, National Financial announced the creation of Service Center, an innovative service technology delivered through its Streetscape® workstation. The new online resource offers broker/dealers service resolution, tracking and reporting capabilities designed to help them gain greater control and quicken the pace of client service. The firm also introduced an imaging platform which allows brokerage firms and their registered reps to more efficiently store, manage and view account documents.
In addition, National Financial conducted its second annual Broker Sentiment IndexSM, an extensive measurement of U.S. brokers' career satisfaction, designed to assist broker/dealer clients with their efforts to attract and retain the most talented brokers. In 2006, National Financial grew client assets by $104 billion (19.1 percent) to $649 billion.
As part of an ongoing effort to offer its brokerage company clients the advanced solutions needed to execute successful trading strategies, Fidelity Brokerage Company introduced CrossStreamSM, a sophisticated alternative trading system (ATS) in the fourth quarter. CrossStream anonymously matches brokerage clients' buy and sell orders against the diverse order flow of the entire Fidelity Brokerage Company. Fidelity Brokerage Company also established an alliance with JPMorgan Chase & Co. earlier in 2006 that enables Fidelity's retail and institutional brokerage clients to participate in equity IPO and follow-on issues offered by JP Morgan.
http://content.members.fidelity.com/Inside_Fidelity/fullStory/1,,7394,00.html
----------------
APRIL 2005
Fidelity Investments' Internet operation has turned up the pressure on rivals such as Charles Schwab and even Merrill Lynch
Operating almost entirely online, it has added more than 1 million retail accounts in the past two years, giving it 9.9 million customers at the end of 2004. That's 40% more than Charles Schwab (SCH ) and 10% more than even Merrill Lynch (MER ).
Fidelity ended the year with $1.13 trillion in assets in its customers' brokerage accounts, muscling aside Schwab for the first time and closing in on Merrill's $1.36 trillion.
Fidelity's renewed assault on the industry's leaders began in October, 2002, when it tapped a 12-year company veteran, Ellyn McColgan, to run the brokerage unit. She trimmed costs, spent millions to upgrade the Web site for retail customers, and launched a series of ruthless price cuts. Fidelity now charges customers who make 120 trades a year just $8 a pop, vs. $14 for customers making 240 trades when she took over.
They spent a lot of money to upgrade their technology and improve customer service and after all that was in place they came up with the price cuts, the media campaign, the conference calls. Last year, it spent $700 million on technology alone at the brokerage unit.
The onslaught has other online brokers scrambling. In just two years, Schwab has lost almost 10% of its brokerage accounts, and E*trade Financial Corp. (ET ) 20% of its accounts. The losses have forced both to cut staff and close offices. The price cuts have been so harsh -- Schwab's average commission per trade fell 43% from 2002 to 2004 and continues to fall this year -- that some analysts say online brokerages are rapidly becoming unprofitable.
Most of McColgan's (since 2002)turnaround strategy came right from the playbook of Edward "Ned" Johnson III, who has run Fidelity since 1972. His philosophy: Spend and spend to improve technology and customer service, and emphasize market share first and profits later.
To attract frequent traders, McColgan purchased Wealth-Lab, a software program used to develop trading strategies, and added a dozen outside research sources to its Web site. The site not only offers reports from firms such as Lehman and Prudential Equity Group but also rates how accurate their past stock picks have been. McColgan also began adding branches around the country, opening 10 last year, including 6 within a half-mile of a Schwab office.
She also did something uncharacteristic of Fidelity: She spent more than $500 million on an acquisition spree. That beefed up its brokerage services for institutions and helped the firm gain ground on Bank of New York's Pershing, the market leader in terms of clients. Fidelity has vaulted over Goldman Sachs and Bear Stearns by adding clients such as Northern Trust, Washington Mutual, and Bank of America.
Now McColgan is focusing on Fidelity's failure to make much headway with financial advisers. In January she decided to replace the longtime head of the advisory business, Jay Lanigan, a 25-year Fidelity veteran. Over the previous two years, his operation had doubled the amount of assets it handled, to $137 billion. But Schwab had collected much more and now boasts $348 billion.
McColgan says she's looking to hire someone who will "bring a burst of energy" and close the "big fat lead" Schwab has built up. To catch Schwab, Fidelity will spend "a lot more" to boost its service for advisers, she adds. Recently, Fidelity introduced Web software -- for advisers -- that combines customer portfolio and contact information with trading and planning tools.
The battle to win over financial advisers and attract the assets of their clients is crucial to staying on top in the brokerage business. That's because each adviser brings in hundreds of accounts, and offering advice is the fastest-growing part of the investment industry. The long bear market and the host of scandals embroiling brokers and fund firms are driving the trend. And most advisers use a brokerage firm to maintain their customers' accounts and execute trades.
As Schwab has bulked up its own staff of advisers, Fidelity has been able to sign up some newer and smaller advisory firms that are worried about competing against Schwab for clients. But Fidelity is finding it much harder to get more established advisers to switch firms. To do so, the adviser must seek approval from each client, and many don't want to move.
Frank Armstrong, who runs a $300 million advisory company in Coconut Grove, Fla., has long used Schwab, but he's nervous about its growing in-house business. He's having Fidelity handle some of his clients' accounts, but many other clients resist switching. "Twice a year we tell them that there are better, more economical choices, but they want to stay," he says. Schwab says its success at attracting more business from advisers belies the notion that it is seen as a competitor.
Armstrong says Schwab has even tried to poach some of his customers when they visited a branch. Schwab says staffers are trained to steer customers to the most appropriate adviser, including one of the 329 independents who make up part of Schwab's outside network. Schwab referred more than $6 billion of business last year to these independent advisers. But fewer than 7% of the roughly 5,000 advisers who keep client assets at Schwab got referrals. Schwab says more want to join than it can accommodate.
This fight over financial advisers might determine which firm wins online brokerage supremacy. For now, Fidelity's vast resources and freedom from the tyranny of hitting quarterly earnings numbers are giving the mutual-fund giant an important edge.
http://www.businessweek.com/bwdaily/dnflash/apr2005/nf2005047_2278_db016.htm
-------------------
June 2005:
Fidelity Retirement Survey
Findings from the Fidelity Retirement Index issued Tuesday show that the typical American household is on track to replace approximately 59 percent of its projected pre-retirement income.
Since the index uses the median, or midpoint value from the findings, that means an equal number of respondents will do better or worse than 59 percent.
Fidelity recommends households be prepared to replace at least 85 percent of their pre-retirement income.
That means if a household earns $100,000 annually, it should be prepared to generate at least $85,000 a year during retirement.
Younger American workers aged 25 to 40 -- the least prepared age group in the survey -- are on track to replace about 55 percent of their pre-retirement earnings, the survey found.
Workers aged 41 to 54 are the best prepared and can expect to replace about 63 percent of their pre-retirement income, and those aged 55 and older trail slightly behind and are on track to replace about 62 percent.
"The harsh reality is that many Americans are woefully unprepared for retirement. They simply aren't saving anywhere near enough -- and many are not investing their retirement savings wisely," Fidelity Brokerage Company President Ellyn A. McColgan, told an audience
Bumping up personal savings
The Fidelity survey found that the typical American household has saved $18,750 for retirement and expects to cover the majority of retirement costs through Social Security and pension benefits.
But with rising retiree medical costs and longer anticipated life spans, Americans need to bump up their personal savings if they want to be ready for retirement, Fidelity said.
Some 16 percent of working Americans haven't even started saving for retirement, the survey found.
For those who have started saving, younger adults aged 25 to 40 typically put away $92 a month for retirement and have saved $9,000, while adults between the ages of 41 and 54 have saved more than $30,000. Their monthly contributions are double that of their younger counterparts at $187, according to the index.
Pre-retirees aged 55 and older typically have $60,000 in retirement savings and contribute $229 each month to that goal, according to the results of the survey.
McColgan also said companies need to play a larger role in demystifying the retirement planning process and encouraged retirement plan sponsors to provide education and guidance as well as automate enrollment process so workers can fully participate in company-sponsored plans.
More than 1,900 households with full-time workers above the age of 25 earning $20,000 or more a year were interviewed for the survey.
http://money.cnn.com/2005/06/07/retirement/fidelity_retirement/
-----------------
2003
A Conversation with Fidelity President Ellyn McColgan
February 12, 2003
She rises to the post from her previous role of president of Fidelity Financial Intermediary Services, succeeding Kevin Kelly. Her new role entails management of Fidelity's vast retail- and institutional-brokerage operations, as well as its direct mutual-fund sales. FBC is comprised of Fidelity Personal Investments, Fidelity Institutional Brokerage Group, and Brokerage Operations and Technology. Fidelity Investment's 2003 technology budget is $2 billion, which is unchanged from 2002.
What do you consider the largest challenge of your new position?
McColgan: Re-inspiring customers and our own employees about the market. Investors have been through a rough couple of years and we need to reach out to them with a message that is fresh and inspiring about the possibilities that are still available to people. But, it's not just about investors. It's about employees in the financial-services industry as well, including our advisers and representatives in our investor centers. Basically, everybody in financial services is pretty worn out after three years of a down cycle.
the Brokerage Operations and Technology Group. What are your top priorities for the Brokerage Operations and Technology Group?
McColgan: There are three priorities. One would be productivity improvements in the technology that supports the foundation of our business - in other words improving existing technology. The second is focusing on how to make the technology work even better for customer service. The third is to identify the top two or three opportunities for market innovation in technology.
Can I say just a couple of words about those three things? Let me start with productivity. We are a big company, we process lots of transactions, we have millions of customers, so the basic production systems that we run every day need to be maintained and run as cost effectively as possible. That's all the behind-the-scenes work that takes thousands of people to do. We never write any ink about it, if you will, but we spend a lot of time and energy there.
The second is customer service. Our customers deal with us in any number of different ways - all of which use technology. We need to make all of those customer-facing systems as user friendly as possible, and we need to have the standard of service for customers be the same across all of those platforms, no matter how you do business with us. That's much easier said than done.
The third thing that is very important to us as a company, with all the money that we spend on technology, is to identify those things that will truly separate us in the market for innovation. The most obvious example of that would be our ActiveTrader Pro Web site (a direct-access Web application for people who trade more than 36 times a year, developed in 2002).
You mentioned getting closer to your customers, what technology are you using to do that?
McColgan: The answered is layered. Customers either deal with us on the phone, through our Web site or in person. Our philosophy, over the years, has been to build the same capability across all those platforms - whether you came in through a branch or via the phone - you could do the same transactions.
What we find now, in fact, ten years later, after investing in all of these things, is that customers use the technologies for different things and we have to be smart enough to know what outlets are used for what types of transactions.
... Oh, I'll give you an example: Remember, years ago, when voice- response systems were considered the best technology around? What we did was build these really complicated trees so that you could go off and do any transaction you wanted to do. Well, now that would drive you crazy, you would never do that. Now about 80 to 90 percent of calls on voice response are for balance and quotes, so now we use voice response for balance and quotes. You know, so simplify it so it is easily accessible
What is Fidelity doing to comply with the new Patriot Act?
McColgan: Fidelity has established an Anti-Money Laundering Office to set consistent policy across all its business units. Among other things, we are: providing computer-based anti-money laundering training to all appropriate employees; performing due diligence concerning foreign financial institutions, including required certifications from foreign banks; and enhancing our suspicious-activity investigation and reporting capabilities, both for our own businesses and our correspondent broker/dealer clients.
Considering Fidelity's vast brokerage force, how does the firm monitor and archive e-mails and instant messages to comply with document-retention rules?
McColgan: We have systems in place for Fidelity's brokerage company to comply with document-retention rules. We also continually monitor and assess our technology and processes, and we continually upgrade and enhance our systems' capabilities to fulfill customer-service, operational and regulatory requirements.
How do you work with your technology group? Does the CIO or CTO report directly to you?
McColgan: Yes, the head of all brokerage technology reports directly to me and he manages the development across all of our businesses and all of our platforms. So, for example, whether it is regarding the Web or voice response or the mainframe, it all reports into one person and we do have a consolidated budget. There is another technology group for Fidelity.com, which is a separate tech group that does not report in to me, but we coordinate all Fidelity.com development with them.
Fidelity has been a leader in the wireless area in financial services, and now wireless has taken a little bit of a backseat, at least at most firms. What is your wireless vision for financial services - are you going to continue to support wireless or pull back from it?
McColgan: I think we are going to continue to invest in wireless as a technology of the future, but I think it is fair to say that it did not play out as we all thought that it would. Remember the advertisements showing investors running to and from meetings doing stock trades on their telephones? I don't think that is what has happened, but virtually everyone I know carries a wireless device of some sort for all kinds of communications purposes, whether or not they are doing trades on it is probably irrelevant.
The simple truth is that we are always in touch with each other and our customers, if we need to be, via all kinds of outlets, therefore I think wireless will always have potential. I think all of us who supported wireless early - as with all of the new technology in the last five years - we learned a lot, and it may evolve into something other than what we expected but I don't think the technology is going to go away.
http://www.financetech.com/showArticle.jhtml?articleID=14701970
-------------------
2003 January
McColgan Named Fidelity Brokerage President
A 20-year financial service industry veteran has been named president of Fidelity Brokerage Co.
Ellyn A. McColgan, who has been with Fidelity since 1990, was named to head the company, where she will manage Fidelity’s retail and institutional brokerage operations, and direct mutual fund sales. Fidelity Brokerage Company includes Fidelity Personal Investments, Fidelity Institutional Brokerage Group and Brokerage Operations and Technology, which manages more than 16 million accounts and holds nearly $700 billion in client assets.
http://www.fa-mag.com/past_issues.php?id_content=3&idPastIssue=67&show=fronline
Subscribe to:
Posts (Atom)
