TD Waterhouse Group, the discount brokerage arm of Toronto-Dominion Bank of Canada, on Wednesday became the latest North American financial company to plant its flag in the Japanese retail securities market.
TD Waterhouse is forming a joint venture with Bank of Tokyo-Mitsubishi to be called BTM-TD Waterhouse Securities Co. The venture, which will get a $53.3 million investment during the first year, will be majority-owned by Bank of Tokyo-Mitsubishi, said John See, vice chairman of TD Waterhouse. New York-based TD Waterhouse will own 45% of the venture, which is to be launched next spring.
Mr. See said the venture would give TD Waterhouse access to the second-largest pool of personal wealth in the world. "Japan is too large a market to ignore," he said.
The country has an estimated $11 trillion of personal assets, said John Payne, a consultant at Cerulli Associates of Boston. Of that, 57% remains in savings deposit accounts, and only 10% is socked away in securities or mutual funds, he said.
"But TD is late to the game," Mr. Payne observed. Attracted by Japanese deregulation of brokerage commissions on Oct. 1, E-Trade Group, DLJdirect, and Charles Schwab & Co., among others, are already there.
However, Mr. See said he is unconcerned because the market is wide open. "It's a market that's just been deregulated in brokerage and commissions," he said.
BTM-TD Waterhouse Securities will begin by selling Japanese securities, but in keeping with TD Waterhouse's global strategy, it will eventually include foreign-listed stocks, Mr. See said.
"Our position is to build a global securities firm," he said.
And TD Waterhouse has aggressively pursued that strategy, with recent deals in the United Kingdom and India, as well as in the United States. The company is also looking to other parts of Asia, such as Korea and Taiwan, as well as in mainland Europe, Mr. See said.
With more than 2 million active accounts around the world, TD Waterhouse is second to San Francisco-based Schwab, which has 6.2 million.
"They've sought to keep pace with Schwab," said Christopher Musto, director of financial services at Lincoln, Mass.-based Gomez Advisors. "Still, they've never styled themselves as an industry leader."
