Exploring the Future Development Strategies of Domestic Securities Firms from their Development Experiences
Date Issued
2005
Date
2005
Author(s)
Wu, Yui-Chun
DOI
zh-TW
Abstract
Under the vision of creating economic miracle of Taiwan by service industry, the Financial Supervisory Commission, Executive Yuan (FSC) was established in July 1, 2004 which expected to assist the development of private sectors by internationalization and liberalization of capital market and deregulation based on the principle of loosening legislation with powerful enforcement. Besides, the government anticipates promoting Taiwan as Regional Financial Center by the constitution of service-oriented culture. This research focused on the development and business scope in the meanwhile of the securities firms, one of the important intermediaries of capital market, which were the motivation and goals of this study.
This research analyzed the industry structure and benefits based on the 6 forces of industry analysis, and reviewed related papers of investment banks, wealth management, internal control and risk management. This research also studied cases of domestic market leaders and analyzed the financial and business information of foreign market leaders to understand their experiences, strategies, core businesses and globalize arrangements. Finally, the developments and strategies of domestic securities firms were found after SWOT analysis for their competitive niche.
The research found that the main operating revenues and profits of domestic securities firms were derived from their brokerage and margin trading businesses. Besides, the revenues and profits from derivatives and bonds were also in good performance due to the relaxing of regulation governing their business scopes and investments. The earnings before tax has been negatively correlated with market trading value since 2000, which shows that diversified development is important for securities firms to keep profits. This study also proposed the following suggestions:
1.To the securities firms:
a)Building the mechanisms of corporate governance and risk management
The securities firms must comply with the laws and regulations under the policy of deregulation and differentiated management. Thus, securities firms may achieve advantages of attracting customers and partners for strategic alliance through building better brand images.
b)The securities firms must create values for customers in order to achieve profits. Customer-orientation is one way to know customer needs; however, under keen competition the securities firms have to lead the customers by providing creative and differentiated services and products for maintaining long relationship with them. Therefore the enhancement of distribution values and the cultivation of human resources are more important than others.
c)MerryLynch and Goldman Sachs Inc. engaged in investment banking and established foreign affiliates after keeping good performance in securities business. In Taiwan the Yuanta Core Pacific Securities, the Fubon Securities and the KGI Securities have been also following similar routes with preliminary and fine outcomes. Therefore the niche markets of overseas Chinese and East-South Asia are worth digging for these securities firms.
2.To government:
a)Relaxation of financial laws and regulations
The restriction of business scopes of securities firms under the Securities and Exchange Act should be abolished to allow securities firms to provide and design financial services and products. Also, their business scopes should be listed negatively to allow securities firms to engage in mutual marketing and cooperative promotion. Besides, the governance on securities, banking and insurance sectors should be consistent to maintain equal foundation for their developments.
b)Streamlining taxation
The derivative and structural products should be taxed based on the same principles. Besides, it is suggested that those products should be taxed based on transaction, which is simpler and can achieve tax revenue timely. Furthermore, the regulation governing the income tax of domestic bonds invested by foreign investors should be revised to maintain internationalized securities market.
c)Establishing offshore markets traded by foreign currency
Establishing offshore securities, bond and futures markets traded by foreign currency and allowing securities firms to be market makers for the sake of attracting foreign capital to invest in domestic industry.
d)Allowing securities firms to invest in Mainland
Allowing securities firms to invest directly and indirectly in Mainland’s securities or collective investment sectors, which will provide securities firms with opportunities to compete equally with international financial institutions.
Subjects
證券商
發展策略
投資銀行
財富管理
風險管理
六力分析
SWOT分析
securities firms
development strategy
investment banking, wealth management
risk management
6 forces of industry analysis
SWOT analysis
Type
other
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