Internet brokerage firm Japan Online Securities, which late last week received official approval to operate as a securities dealer, has announced its commission structure and initial service offerings.
The Itochu-led firm said it will accept online account requests from October 1, the day that Japanese brokerage commissions are to be fully deregulated, and launch 24-hour trading services via phone, fax, and the Internet in November.
Japan Online Securities will initially handle shares listed on the Tokyo and Nagoya Stock Exchanges and Osaka Securities Exchange, as well as over-the-counter stocks and two types of domestic investment funds (MMF and MRF).
By March 2000, the company intends to expand operations to include some 20 kinds of investment funds.
Japan Online Securities expects to attract individual investors by charging significantly lower commissions than traditional securities firms and enabling buy and sell orders to be placed online 24 hours a day, 365 days per year.
CEO Hisanori Fujishima said the company hopes to open 30,000 accounts by March 2000, and has set a goal of 300,000 accounts by 2004.
“We expect to achieve profitability before we reach 100,000 accounts, and are likely to be in the black by the 3rd quarter of 2001,” he added.
Japan Online Securities will offer online investors a choice of two commission structures.
“Course A” fees will range from 1,500 yen (US$14.15) on trades of less than 500,000 yen (US$4,717) to 0.2 percent of the total price for trades of 1,000,000 yen (US$9,434) or more.
“Course B” users will be able to place 10 online orders per month, of up to 5 million yen (US$47,170) per transaction, for a monthly fee of 20,000 yen; each additional order would be charged a 2,000 yen (US$18.87) commission.
Free investor services will include immediate e-mail or phone notification of transaction completion, real-time price tracking, quarterly corporate reports, brand screening, and investment symposiums, and individual account data will be Microsoft Money 2000 compatible.
In what is the company says will be an industry first, online investors will be able to specify automated buy or sell conditions, such as “sell stock A if its price rises to X; buy if it falls to price Z.”
There will be a 500 yen (US$4.72) surcharge for condition as well as limit orders.
As its back office system, Japan Online Securities will use a customized version of Fujitsu’s MetaOffice/Securities software package.
“With this system,” said management strategy specialist Takumi Usuda, “we will be able to respond to various buy and sell orders at a level comparable to traditional securities offices.”
The brokerage will enforce a variety of security precautions.
Internet communications will be protected by an SSL 128-bit security system, said to be the most sophisticated technology now available in Japan.
Customer data will be fully encrypted by all servers, back office access will be strictly controlled by iris [eye] scanning, and all employee PCs will use a hardware-encoded fingerprint ID system.
“It is probably no exaggeration to say that our security system is number one in the industry,” said Fujishima.
The brokerage was established in April 1999 by Itochu.
On September 27, when capitalization of Japan Online Securities is to be increased to 2 billion yen (US$18.9 million), Itochu will have a 58.95 percent share in the company.
Other leading shareholders are Asahi Mutual Life Insurance (10.0 percent) and Dai-Ichi Kangyo Bank, Yasuda Fire & Marine Insurance, Tokyo Short-Term Loans, and JAFCO (5.0 percent each).
Microsoft Japan and Fujitsu will hold a 2 and 1 percent stake, respectively.
