1. Although revenues and expenses for BDs both rose 19% in 2018 from the year before, their pretax income rose 17%.
(All charts by SIFMA.)
2. The number of BDs declined 3.2% from 2017 to 2018.
3. The number of registered reps fell very slightly in 2018 from the year before but were down 2% from a peak in 2015.
4. Unsurprisingly, reps are concentrated on the East Coast and in more populous states.
5. Over the past nine years, the U.S. share of the global equity market capitalization grew nine percentage points while the shares for the U.K, European Union, Japan and other developed markets declined and the share for emerging market equities rose slightly. Equity issuance in the U.S. in 2018 totaled $221.1 billion, up 0.4% year over year.
6. Issuance of corporate debt, asset-backed securities and non-agency mortgage-backed securities fell 11.8% in 2018.
7. The decline in U.S. debt issues coupled with a very slight increase in new U.S. stock shares led to an 11% drop in corporate capital raised last year. Long-term municipal bond issues fell more than twice as much on percentage basis, down 25% to $338.3 billion.
8. IPOs raised more money in 2018 than in any of the past three years, but they were swamped by the more than $90 billion raised in 2014, when Alibaba alone sold $25 billion worth of shares in an IPO.
9. The share of U.S. equities held by U.S. households fell more than 9% in 2018, according to the Federal Reserve, which includes nonprofit organizations in its definition of the household sector. Households' holdings of liquid assets which, in addition to stocks, include bank deposits and CDs, Treasuries and agency debt, money market funds, agencies, corporate bonds and mutual funds totaled $42.2 trillion in 2018, down from $42.9 trillion in 2017.
Total 401(k) assets fell 2.7% to $5.2 trillion; defined benefit assets fell just 0.4%, but they total far less, just $3.4 trillion.
11. Perhaps the different performance of defined benefit and define contribution plans had to do in part with the different asset mixes in the two types of plans. Defined benefit plan assets, which total far less than defined contribution plan assets, are much more heavily invested in bonds than DC plans, which favor mutual funds above all other assets.
Every year the Securities Industry and Financial Markets Association, the trade group representing securities firms, banks and asset management companies, releases its Capital Markets Fact Book which provides voluminous data on the financial industry, markets and individual investors.
In addition to the size and growth of U.S. and global capital markets in the past year, the fact book includes data on the number of broker-dealer firms and FINRA-registered reps in the U.S. overall and in individual states, plus info on BD revenues and profits. Data on the financial assets of individual investors, including their retirement assets in defined benefit, defined contribution and IRA plans, are also included.
Several dozen sources are tapped for their data, including in addition to SIFMA, the Chicago Board Options Exchange, New York Stock Exchange, Federal Reserve, Bank of International Settlement, Investment Company Institute, U.S. Labor Department, Bloomberg and Dealogic.
The 2019 Capital Markets Fact Book, based on 2018 data, is a mixed bag.
Profits at FINRA-registered BDs in the U.S. increased 17% but employment in the securities industry employment rose just 2.7% in 2018, to 970,100, according to the U.S. Labor Department. About two-thirds of industry workers were registered reps.
Merger and acquisition announcements soared almost 24% (17% were completed by year-end) and IPO volume jumped 27%, but equity issuance, including common and preferred shares, increased a mere 0.4% to $221.2 billion. And who can forget the tumult in the fourth quarter, which wiped out all of the year’s earlier stellar gains, leaving the S&P 500 with a 6% loss for the year, its worst performance in a decade.
Also in 2018, corporate and municipal bond issuance, in contrast, fell by double digits and U.S. household liquid assets U.S. retirement assets shrunk about 1.5%.
Check out the slide show above for some of the key highlights from SIFMA’s latest Fact Book. Charts by SIFMA.
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