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IT Spending Trends in the Japanese Securities Industry

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14 March 2008

Abstract

Tokyo, Japan 14 March 2008

IT investment by the Japanese securities industry will continue to grow. Outlays for IT by Japanese securities firms will reach US$3.1 billion and US$4.8 billion in fiscal years 2008 and 2012.

In the past several years there has been talk of the disintegration of central securities markets. Proprietary trading systems (PTSs) and off-exchange trades are increasingly attracting attention due to deregulation. Trading volume is increasing at PTSs and alternative trading systems (ATSs) that are already in operation, indicating that fragmentation of Japan's equity market has already begun.

In a new report, , Celent explores recent and upcoming growth within this sector. IT investment by Japan's securities industry has increased significantly compared with 2005 levels, aided by the recovery of the market. Given that major overseas financial industry participants, including the exchanges, are enhancing their access tools to the capital markets, Japanese securities firms need to accelerate their globalization efforts. Furthermore, securities firms keep upgrading the accuracy and functionality of client interface systems, both in the retail and wholesale sectors, investing heavily in both new technology and enhancements of existing systems.

Celent expects that IT investment by Japanese securities firms will reach US$3.1 billion and US$4.8 billion, in fiscal years 2008 and 2012, respectively. From 2002 to 2006, IT investment by securities firms grew at an annual rate of 10.11%. Despite the sub-prime effect, this rate should continue to increase after 2007 to 11.7% annually.

"A shift in the market structure of Japan's securities sector will have a great impact on firms. As the industry goes through significant changes, participants will continue to make aggressive IT investments," says Yumiko Manchu, Celent analyst and author of the report.

This report reviews the current business environment for Japan's securities industry and discusses future trends and expectations. The report goes on to analyze the areas in which securities firms are making IT investments.

The30-page report contains 23 figures. A table of contents is available online. Members of Celent's Retail Securities & Investments and Institutional Securities & Investments research services can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.