|No.101 February 1, 2006|
|Evolution of the US Retail Securities Market (Volume 2)
--Regulatory Reforms for Banking and Securities Markets--
In 1999, Merrill Lynch, the largest securities firm, announced a fee-based account service in which fees are charged at a prescribed rate based on the balance of assets in the account instead of brokerage commissions. The start of such fee-based account services gave rise to the question of whether Merrill Lynch's registered representatives are required to register as investment advisors under the Investment Advisors Act of 1940. However, in the same year, the SEC permitted the provision of such services under certain conditions.
In December 2002, settlement was reached between the nation's top securities firms against which allegations were made regarding undue influence of investment banking departments on research departments that deceived investors and regulators such as the SEC. For the five years following July 2004, these securities firms were required to distribute research reports made by independent research firms to investors.
In Japan, the methods to provide financial services are significantly changing through the participation of banks in the securities brokerage business and the emergence of the agency business for banks, which is planned for April 2006. It is of urgent necessity for financial institutions to develop products that go beyond simple banking, securities or insurance products and that fully meet the needs of aging savers, and to re-establish a service structure to support such new products.