New York, NY, USA
June 6, 2005US
Discount Online Brokerage Update 2005
Report Published by Celent
According to Celent the online brokerage industry is
only operating at 35% of trading capacity -- at best. While retail trading
has recovered somewhat from the crash of 2000, Celent believes it is still
21% below the 2000 peak.
E*TRADE’s bid for Ameritrade and the potential TD
Waterhouse acquisition is only the first volley, as the pressure for online
brokers to consolidate increases. In a new report, US Discount
Online Brokerage Update 2005, Celent provides an overview and
analysis of key market trends, identifying leading industry players and
discussing their prospects for future growth. It further looks at the
trends which are creating pressure for industry consolidation in the
discount online brokerage industry. The report also profiles several
online retail brokerage firms and their product and service offerings.
As the discount online brokerage industry continues
to recover from the dot-com crash of 2000, firms are getting used to the
fact that retail trading levels may never return to the levels seen in
2000, and commissions are on a slow but sure decline. However, the leading
online brokerages have had reasonable success in their efforts to develop
new sources of revenue as the business continues to evolve.
"While the discount
online brokerage industry will face extreme competition over the short
run, it is not an industry that is going away, as people will always need
brokerage services" says Lauren
Bender, analyst in Celent’s Securities and Investments
group and author of the report. "While it is clear that trading
services -- the traditional bread-and-butter of the brokerage business --
is fast becoming a commodity, clients will gladly reward those firms that
are able to help them successfully manage (and grow) their net
worth." "There will be room for one or two players to focus
profitably on providing efficient trading services, but for the most part
the firms that will be successful five years out will be those who are
able to create value-added financial management products and
services."
In spite of current and future price cuts, sluggish
growth and costly infrastructures, the discount online brokerage firms, in
general, are well positioned to remain important providers of financial
services to a growing number of Americans, as services traditionally
provided by banks and investment advisors are increasingly provided by
brokerage firms. The discount online brokers can expect to be a major
beneficiary as this convergence in the retail financial services sector
continues.
The firms examined in the report are Ameritrade,
Charles Schwab, E*TRADE, Fidelity, Scottrade and TD Waterhouse.
The 49-page report contains 28 figures. A
table of contents
is available online.
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