Companies in this industry broker deals for buyers and sellers of securities. Major companies include TD Ameritrade, E*Trade, and Scottrade, and brokerage units of Citigroup and Wells Fargo (all based in the US), as well as Credit Suisse (Switzerland), Deutsche Bank (Germany), Macquarie Group (Australia), and Nomura (Japan).
Many large US-based brokers, particularly those affiliated with major banks and financial services companies, operate internationally. Global financial hubs are located in the UK, US, Hong Kong, and Singapore. London's status as a global financial center has been cast into doubt following the UK's decision in 2016 to leave the European Union.
The securities brokerage industry in the US includes nearly 4,000 companies with combined annual revenue of about $120 billion. The securities industry is undergoing major consolidation: Since 2011, the number of brokerage firms in the US has fallen by almost 15%, according to FINRA.
Demand is driven by the returns on securities relative to alternative investments. The profitability of individual companies depends on efficient operations and good marketing. Large companies have economies of scale in operations and high name recognition. Small companies can compete effectively by offering better customer service. The US industry is highly concentrated: the top eight companies account for 50% of industry revenue. Indeed, five firms (ranked by customers and assets) -- TD Ameritrade, E*Trade, Fidelity Investments, Charles Schwab, and Scottrade -- dominate the business in the US.
The traditional brokerage industry that sold stocks...