Online trading will capture Japanese retail brokerage market

Online trading will capture Japanese retail brokerage market

Nearly 80 per cent of all retail trading will be online in Japan by 2005, according to a report from research company Celent Communications.

The new report, 'Retail Brokerage in Japan: Fighting Stagnation with Innovation,' predicts an increase in Japanese Web-based trading will be driven by a small but active segment of self-directed investors.

Celent points to new investment products being introduced by full-service, online and foreign securities firms in Japan, including covered warrants, exchange-traded funds and Japanese real estate investment trusts.

Neil Katkov, a Celent analyst and author of the report, says: "Domestic brokerages, faced with intense competition on the institutional side from foreign firms, are paying more attention to the retail sector, offering a diverse line-up of new products to attract individual investors.

"Uptake of these products will be slow and insufficient to reverse the decline in retail securities investment, which fell seven per cent between 1995 and 2000. This harsh environment, however, has only intensified the competition to attract retail business. Firms will continue to introduce new investment products and more sophisticated features and services both online and off."

The findings are part of a wider research project into the retail brokerage industry in Japan, which warns that Japanese brokerages will not be successful in luring substantial participation in retail without a sustained market recovery.

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