, key U.S. brokerage houses -
TD Ameritrade Holding Corporation
The Charles Schwab Corporation
) - have decided to shutter their businesses in Europe. This move
by the brokerage giants comes on the heels of the slowdown in
trading activities in the market due to the reluctance of investors
in betting their money attributed to the continued ambiguity
regarding the prospects of the Euro Zone.
TD AMERITRADE (AMTD): Free Stock Analysis
DEUTSCHE BK AG (DB): Free Stock Analysis Report
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UBS AG (UBS): Free Stock Analysis Report
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Though these firms have earned huge profits through trading in the
share market, yet at current level, European dealers are scrambling
to maintain profit levels. European share trading for the year has
recorded its lowest level since 2009.
Reasons for Closure
Bearing the brunt of Europe's sovereign debt crisis and slow
economic recovery, funds managers are striving hard to make profits
by trading in European countries.
Schwab has come up with the closure of the European arm of its
derivatives trading unit, OptionsXpress on November 30. The company
has intimated clients to transfer their account to another company
or get their positions liquidated and retrieve funds.
TD Ameritrade also restricted the opening of new accounts and new
business transactions in some foreign countries. Moreover, accounts
will be closed down in Italy and Belgium, while some European
countries will be constrained with certain types of transactions.
In recent months, among others,
Deutsche Bank AG
Nomura Holdings, Inc.
), reorganized their European equities units with huge layoffs.
For quite some time now, the investors have been losing huge
amounts in trading. If this continues along with mounting
regulatory pressure, it would be a huge blow to investors in the
ongoing economic situation.
If the European crisis continues further, there will be significant
impact on worldwide capital markets. On the other hand, the
extremely low interest-rate environment is another manifestation of
this uncertain macro backdrop.
Concerns about the European finances and soft U.S. growth prospects
have made treasury instruments the choice of safe asset class. As a
result, the yields on benchmark treasury bonds are hovering at low
We don't expect the potency of the sector to return to its
pre-recession peak anytime soon. The economic intricacies may lead
to further disappointments in the upcoming quarters.