SMBC Nikko Securities Inc.
Native name
SMBC日興証券株式会社
TypeSubsidiary
IndustryFinancial services
FoundedJune 15, 2009 (2009-06-15)
FounderGenichi Toyama
Headquarters
3-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo 100-8325, Japan
,
Japan
Key people
Yasuyuki Kawasaki (Chairman)
Yuichiro Kondo (President & CEO)
ServicesSecurities brokerage
Investment banking
OwnerSumitomo Mitsui Financial Group (100%)
Number of employees
9,355 (31 December 2021)
ParentSumitomo Mitsui Financial Group
Websitewww.smbcnikko.co.jp

SMBC Nikko Securities (SMBC日興証券株式会社) is a securities firm in Japan which engages in the operation of large-scale comprehensive securities broking and trading services. The company was founded in 2009 and is headquartered in Tokyo, Japan.[1] It is a wholly owned subsidiary of the Sumitomo Mitsui Financial Group. In Japan, its the third largest securities brokerage firm.[2]

History

The origins of SMBC Nikko Securities can be traced back to a company named Kawashimaya Shoten (川島屋商店) which was formed in July 1918 by Genichi Toyama.[3] It was formed to buy and sell stocks and bonds.[3]

In 1920, the firm was incorporated into a stock company.[3]

During the same year, Nikko Securities was created out of the securities department of the Industrial Bank of Japan.[3]

In 1939, Kawashimaya Shoten spun off its securities division forming Kawashimaya Securities.[3] In 1943, Kawashimaya Securities absorbed Kawashimaya Shoten.[3]

In 1944, Kawashimaya Securities and Nikko Securities merged with the resulting company continuing to use the Nikko Securities trade name.[3]

In 2001, the firm changed its name from Nikko Securities to Nikko Cordial Securities.[4]

In 2007, the firm became a subsidiary of Citigroup after Citigroup purchased Nikko Cordial Corporation forming Nikko Citi Holdings Inc.[5][6]

On 15 June 2009, Nikko Cordial Securities De-merger Preparatory Company Ltd was formed.[1] This is considered the legal entity of the firm up to the present.In October 2009, Nikko Cordial Securities De-merger Preparatory Company Ltd took over all of the operations of the original Nikko Cordial Securities business and certain businesses of Nikko Citigroup. It was then renamed Nikko Cordial Securities.[4] Then Citigroup sold the firm to the Sumitomo Mitsui Banking Corporation.[7]

In 2011, the firm changed its name from Nikko Cordial Securities to SMBC Nikko Securities.[4]

In 2016, the firm became a wholly owned direct subsidiary of Sumitomo Mitsui Financial Group.[4]

In 2018, the firm merged with SMBC Friend Securities while continuing to use the SMBC Nikko Securities trade name.[4]

Controversies

2012 Insider Trading Fine

In April 2012, the Financial Services Agency fined the firm for leaking information about a stock offering which was considered insider trading.[2][8] Directors of the firm passed on word of the offering to at least 21 sales branches without carrying out the proper internal procedures to control the information flow.[8] At eight of those branches a total of 23 sales staff tipped off 34 clients to purchase the shares once the deal was launched. The deal was said to be a roughly 1 trillion yen ($12.4 billion) offering by Sumitomo Mitsui Financial Group, Nikko's parent, in early 2010.[8]

2021-2022 Investigation into Market Manipulation

In November 2021, the Securities and Exchange Surveillance Commission (SESC) launched an investigation into the firm over suspicious stock transactions.[9] The firm was suspected of using its proprietary trading desk to illegitimately maintain the price of stocks in block trades.[9][10] The firm launched a complaint with financial regulators after a senior trader died following intensive questioning.[10]

On 4 March 2022, four employees of the firm were arrested on allegations of market manipulation.[2][11] The employees were Trevor Hill (Head of equity), Alexandre Avakiants (Deputy head of equity), Makoto Yamada (General manager of equity trading) and Shinichiro Okazaki (General manager of structured products).[2][11] The firm's President & CEO, Yuichiro Kondo issued a public apology afterwards.[2][11]

On 23 March 2022, SESC called on prosecutors to extend allegations against the firm. If prosecutors accept the additional charges, three more staff from the firm could be indicted.[12]

References

  1. 1 2 "Corporate Overview | SMBC Nikko Securities Inc". www.smbcnikko.co.jp. Retrieved 18 March 2022.
  2. 1 2 3 4 5 "UPDATE 2-SMFG's brokerage launches probe after executives arrested". Reuters. 5 March 2022. Retrieved 18 March 2022.
  3. 1 2 3 4 5 6 7 "History of The Nikko Securities Company Limited – FundingUniverse". www.fundinguniverse.com. Retrieved 18 March 2022.
  4. 1 2 3 4 5 "History | SMBC Nikko Securities Inc". www.smbcnikko.co.jp. Retrieved 18 March 2022.
  5. ↑ "Citigroup wins control of Japan's Nikko Cordial". Reuters. 27 April 2007. Retrieved 18 March 2022.
  6. ↑ "Citigroup to buy rest of Nikko in $4.6 bln deal". Reuters. 2 October 2007. Retrieved 18 March 2022.
  7. ↑ "Citi closes sale of Nikko Cordial to SMFG". Reuters. 1 October 2009. Retrieved 18 March 2022.
  8. 1 2 3 "UPDATE 1-Japan regulator reprimands SMBC Nikko in insider crackdown". Reuters. 20 April 2012. Retrieved 18 March 2022.
  9. 1 2 "SMBC Nikko and staff probed over suspicious stock transactions". The Japan Times. 3 November 2021. Retrieved 18 March 2022.
  10. 1 2 Lewis, Leo; Slodkowski, Antoni; Sugiura, Eri (9 March 2022). "SMBC Nikko complained to regulators over trader's death after questioning". Financial Times. Retrieved 18 March 2022.
  11. 1 2 3 Auto, Hermes (16 March 2022). "Scandal rocks Japanese finance as SMBC Nikko employees are arrested | The Straits Times". www.straitstimes.com. Retrieved 18 March 2022.
  12. ↑ Lewis, Leo; Sugiura, Eri; Slodkowski, Antoni (23 March 2022). "Japan's regulator extends allegations against brokerage SMBC Nikko". Financial Times. Retrieved 23 March 2022.
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