IT Spending in the Japanese Securities Industry

by Neil Katkov, PhD, November 21, 2005


Tokyo, Japan November 21, 2005

Japanese Market Recovery Giving Heavy Boost To Securities Industry IT Spending

Japan痴 market recovery is gaining force, with trading soaring to record levels in recent months. The Japanese securities industry, enjoying higher revenues but facing intractable competitive and compliance issues, will boost spending on information technology from US$2.84 billion for the year ending March 2006 to US$3.47 billion in March 2008, a robust 10.5% compounded annual growth rate over this period.

These are heady times for Japan's securities markets. The unsteady recovery of the past few years seems to have suddenly found its legs and leapt into record trading levels in September and October 2005. Buoyed by this resurgence, securities firms posted solid revenue and profit growth for the September 2005 mid-term results. Celent痴 new report, " ", describes how the industry's return to profitability and business and regulatory pressures are combining to drive expanded spending on information technology.

Business models in the industry are changing, with new marketing channels擁ncluding online brokerage and third party distribution through banks and other businesses葉hreatening to disrupt the traditional full-service brokerage's dominance of the market. The securities industry is also seeing increased competition from other financial services sectors, as banks and insurance firms begin to implement wealth management-style marketing strategies in order to vie for a greater share of individual investor assets. On the institutional side, securities firms are adopting advanced technologies such as algorithmic trading in the front office and continuing to build straight-through processing capabilities in the back office. Firms will also soon be facing a range of compliance requirements, including expected regulations governing financial transparency and business continuity planning.

"Constrained by poor profitability during the years of the market downturn, is now being buoyed by improved earnings due to the recovery," states Neil Katkov, manager of Celent痴 Asia Research group and author of the report. "Firms will be investing more in new technologies and products as they strive to enhance their competitiveness and maximize the opportunities presented by the revived market."

In addition to Celent's analysis of technology spending trends in the Japanese securities industry, the report provides an overview of the industry痴 institutional structure as well as key issues facing retail and institutional brokerage. The report also introduces the major domestic suppliers of brokerage systems and their respective market shares. The report concludes with a consideration of emerging issues that will influence technology trends in the Japanese securities industry in the years to come.

The 30-page report contains 21 figures and 1 table. A table of contents is available here.

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents


Tokyo, Japan November 21,  2005

IT Spending in the Japanese  Securities Industry 

Return to report Abstract

Executive Summary 3
Introduction 5
Business Environment 7
Retail Securities Trends 12
  Wealth Management 12
  New Products 13
  Channel Delivery 14
  Online Brokerage 14
Institutional Securities Trends 16
  Third Party Distribution 16
  Electronic Trading 17
  Hedge Funds 17
  Compliance 17
Technology Trends 18
  Front End Technologies 18
  Straight-Through Processing 18
  Lower TCO 18
  IT Outsourcing 19
  Business Process Outsourcing 19
  Business Continuity Planning 19
Brokerage Systems Vendors 26
Future Trends 28
Objectivity & Methodology 29

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