OPINION
2018 May/04
Competition and Its Recent Changes in the Japanese Securities Industry
May. 03, 2018
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Chang, Jung-moh
- Summary
- Japan’s securities industry has experienced marked shifts in its competitive landscape with the emergence of new players over the past two decades after the licensing system was replaced by the registration system in 1998. Megabank-owned securities companies grew into large full-service firms. The deregulation of brokerage commissions paved the way for the emergence of online securities firms. From 2006 onwards, the securities industry saw an increase in securities companies owned by regional banks. A noteworthy characteristic of the industry in Japan is a relatively good market segmentation by clientele and by region, which resulted from the entry of new types of players into the industry. Recently, the industry has been undergoing changes that could affect its stable competitive landscape. First, growing interest in customer-oriented business conduct is highly likely to alter securities firms’ commission structure. Second, securities companies have started to offer extra services such as inheritance and tax advice in response to the ageing of their customer base. Third, the competition between traditional brick-and-mortar and online securities firms is getting intense as traditional securities firms are making inroads into the young investor segment. We need to watch attentively to see how these changes wrought by the ageing population will reshape the Japanese securities industry.