Which financial market sectors will thrive during this coming decade as financial institution profitability is squeezed? The Morgan Stanley (MS) acquisition of E-Trade provides a big hint. The transaction is emblematic of the coming revolution in the market and corporate structure of finance.
This article considers the larger industry-wide pressures that drove the acquisition. The central fact of financial institution management in this decade will be the collapsing margins of both buy-side and sell-side firms. These falling margins may not mean falling profitability; but falling margins can only be overcome through higher volume,