To read the complete article, visit http://www.beaconequityresearch.com/ – Click News and Commentary
The deceleration of GDP growth, substantial trading losses and significantly lower underwriting revenues have made the securities industry gross revenue related to NYSE-reporting firms to decline by 3.6% in the Q3 2007 to $78.8 billion compared to Q3 2006. In addition, the housing sector contraction has made brokerage companies with significant exposure in the sector to report severe losses and assets write-downs.
Online brokerage companies, in contrast, have reported strong operating results and customer additions during 2007. As trading technology improves across the board, online firms have become increasingly competitive on price, yet price is still the major differentiator among the market players. Tiburon Strategic Advisors estimated that the total number of online accounts was 34 million in 2006 and is likely to growing at double-digit rates in both 2007 and 2008. Mintel’s survey Online Trading in the United States 2007 revealed that 17% of respondents have used an online brokerage company in the past 12 months.
