The Investment Industry

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Term Paper Title	The Investment Industry
# of Words	2207
# of Pages (250 words per page double spaced)	8.83

The Investment Industry

The Investment Industry

     The investment industry is composed of a wide variety of firms.  The
main players include independent full line brokerage firms, investment bank
subsidiaries of chartered banks, and discount brokers.  Independent full line
brokerage firms offer a wide range of services, including underwriting, trading
of stocks, advice and research.  In essence, the full service brokerage
subsidiaries of chartered banks offer the same services, however, banks'
brokerage firms may have a larger pre-established clientele.  Finally, the
discount brokers are basic stock brokers that perform trades for clients who do
not want investment advice.  Usually, this service is targeted toward the
sophisticated investor who does his/her own research to incur minimal commission
fees.
     Banks entered the investment industry in 1987, whereby they took over
full-service brokerages, introduced mutual funds to the banking industry and
became part of discount brokering.  From this time on, chartered banks have
expanded their dominance in the industry by acquiring key players in the
industry or branching off into full brokerage services.  For example, the
brokerage firms for CIBC, Royal Bank, Toronto Dominion Bank, Bank of Nova Scotia
and Bank of Montreal are Wood Gundy, RBC Dominion, Evergreen, Scotia McLeod and
Nesbitt Burns respectively. In addition, the aforementioned chartered banks have
also branched into the discount brokerage sector.
     As of December 1994, the Securities Industry as a whole included 158
firms, directly employs over 24,000 people, has operating revenue of $5.1
Billion and operating profit of $1.2 Billion (Appendix A).  Within this industry
the largest firms ranked by revenue are:  RBC Dominion Securities ($1 Billion),
Midland Walwyn ($480 million), Burns Fry ($416 million) and Nesbitt Thomson
($335 million) (Appendix B).  It is evident that the industry is highly
concentrated in a small number of companies.  The top 4 leaders in the industry
accounted for 44% of revenue, while the top 8 was 51%.
     Industry information from 1993 displays further segregation, between
retail, institutional and integrated firms.  Integrated retail-institutionalized
firms (RBC Dominion Securities, Scotia McLeod, Nesbitt Thomson, Wood Gundy) made
up 66% of the industry's revenue, while strictly institutional firms (First
Marathon Securities, Gordon Capital Corp. and Loewer Ondaatje McCutcheon Ltd.)
made up 21% and Retail firms (Green Line Inves...

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