Charles Schwab Corp.:
Charles Schwab (SCHW), the traditional discount brokerage which has transformed itself in recent years into a full-service financial services firm, could see a boost from financial reform as well.
Transparency in the over-the-counter derivatives market could conceivably lead to more interest in these instruments from retail investors, a development that would help all the online brokers if it leads to increased trading.Investors in general are becoming more sophisticated and looking for increased diversification in their financial portfolios. Schwab's customer base includes plenty of individual investors, but the company also has relationships with independent financial advisors who serve high-net-worth individuals are also a large part of the company's clientele through its asset management business, which provided more than 40% of the company's total revenue in the latest quarter. Schwab, with $1.49 trillion in client assets, has been aggressive about trying to meet the needs of these customers, and it took another step on Thursday when it announced a joint agreement with JPMogran to offer select fixed income products including the big bank's new-issue and secondary municipal bonds, corporate debt securities, non-convertible preferred securities as well as giving access to its fixed income research to its customers. Whether or not investors are interested in testing out a credit default swap remains to be seen, but if increased transparency comes to pass, investor curiosity is sure to follow. --Written by Laurie Kulikowski in New York.
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