Questions and Hypotheses

A number of questions were raised from the literature study and several hypotheses generated as a result of searching for the true meaning within the data.

1. Were the alliances which were made formed too hastily? And if so, are the broking/jobbers and their parents wholly compatible?

2. If it was the case that the British merchant banks were forced to acquire their own stock market subsidiary in order to curb the American, and later on the Japanese invasion, what steps have been taken in fully amalgamating the stock broking subsidiaries to the rest of the operation?

3. Was the move by the independent merchant banks and their stock broking subsidiaries to avoid the main competitive areas of an underestimation of customer loyalty and their longstanding expertise and reputations?

4. Could they not have adopted some American policies such as ‘brought deals’ and use their longstanding relationship to gain an advantage over foreign competitors?

5. Could incentives have been given by the parent companies to their newly owned broker dealer subsidiaries to ensure that competitive motivation remained among the employees?

6. Were the prices paid in acquiring some Stock Exchange members too high and did this represent an unnecessary risk to the parent companies?

7. Did the partnership between brokers/jobbers and their parent companies represent a conflict of interests?

8. Who benefited from the substantial increases in turnover after Big Bang and to what extent did their commission rates decrease in order to gain this volume of business?

9. Will the revenue gained in this new competitive environment be sufficient to provide an adequate return on investment?

10. Will deals earning no commission become the norm for institutional business, and if so, will private client commission be enough to sustain broking revenues?

Hypotheses generated from the Literature Review

1. The stock broking and jobbing sections of the financial services industry are no longer separate entities. They, (that is the majority of London firms) have forged strong links with other institutions in the other market sections of banking, insurance and other financial institutions.

2. Competition in the industry is fierce, profit objects have been superseded by those of market share, primarily in the corporate client sector. Individual clients are, however, being fought for as a means of sustaining present broking revenues.

3. The aftermath resulting from the intense competition will leave the larger financial corporations with the majority of corporate clients with the others struggling to retain their individual clients.

4. Those British firms who chose to remain and compete with the foreign institutions may find the battle long and expensive to the point where revenues are over-whelmed by trading overheads.
5. The entry of parent companies may have been interpreted by some broker dealers as a ‘soft cushion’ or as a bottomless pit of funds and thus complacency may lead to a slackening of firm strategies and goals at the workplace.

6. The inflated prices paid for broking and jobbing firms may be placing undue pressure on them to make profits at a time where market share at the expense of revenue is a necessity for survival.

7. The substantial increases in Stock Exchange turnover have been largely offset by reduced commission rates. Deals of a quarter million pounds or more account for 60% of all business-commission gained from these transactions is low and a proportion represents institutional business where net commission deals are becoming frequent.