Securities Brokerages Industry Profile

Companies in this industry broker deals for buyers and sellers of securities. Major companies include Charles Schwab, E*TRADE, and TD Ameritrade, and brokerage units of Citigroup and Wells Fargo (all based in the US), as well as Credit Suisse (Switzerland), Deutsche Bank (Germany), Macquarie Group (Australia), and Nomura (Japan).

Many large US-based brokers, particularly those affiliated with major banks and financial services companies, operate internationally. Major global financial hubs include Hong Kong, London, New York, and Singapore. London's status as a global financial center has been cast into doubt following the UK's decision in 2016 to leave the European Union.

The securities brokerage industry in the US includes about 23,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $126 billion.

COMPETITIVE LANDSCAPE

Demand is driven by the returns on securities relative to alternative investments. The profitability of individual companies depends on efficient operations and good marketing. Large companies have economies of scale in operations and high name recognition. Small companies can compete effectively by offering better customer service. The US industry is highly concentrated. Four firms (ranked by customers and assets) -- TD Ameritrade (owner of Scottrade), E*Trade, Fidelity Investments, and Charles Schwab -- dominate the business in the US. Discount brokerage firms, which originated in the mid-1970s when stock-trading commissions were deregulated, have become major industry players.

The traditional brokerage industry that sold stocks ...