SMBC Nikko Securities (SMBC日興証券株式会社) is a

securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

firm in

Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...

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 Tokyo (; ja, 東京, , ), officially the Tokyo Metropolis ( ja, 東京都, label=none, ), is the capital and List of cities in Japan, largest city of Japan. Formerly known as Edo, its metropolitan area () is the most populous in the world, ...

. It is a wholly owned subsidiary of the

Sumitomo Mitsui Financial Group is a Japanese multinational banking and financial services institution headquartered in Yurakucho, Chiyoda, Tokyo, Japan. The group operates in retail, corporate, and investment banking segment worldwide. It provides financial products and ser ...

. In Japan, its the third largest

securities brokerage A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be con ...

firm.

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. It was formed to buy and sell stocks and bonds. In 1920, the firm was incorporated into a stock company. During the same year, Nikko Securities was created out of the securities department of the

Industrial Bank of Japan The Industrial Bank of Japan, Limited (IBJ), based in Tokyo, Japan, was one of the largest banks in the world during the latter half of the 20th century. It combined with Dai-Ichi Kangyo Bank and Fuji Bank in 2002 to form Mizuho Financial Group ...

. In 1939, Kawashimaya Shoten spun off its securities division forming Kawashimaya Securities. In 1943, Kawashimaya Securities absorbed Kawashimaya Shoten. In 1944, Kawashimaya Securities and Nikko Securities merged with the resulting company continuing to use the Nikko Securities trade name. In 2001, the firm changed its name from Nikko Securities to

Nikko Cordial Nikko Cordial Corporation was the holding company for Nikko Cordial Securities, Japan's third largest brokerage until 2008, when Nikko Cordial Corporation became a wholly owned subsidiary of Citigroup; upon completion of share exchange, it merge ...

Securities. In 2007, the firm became a subsidiary of

Citigroup Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...

after Citigroup purchased Nikko Cordial Corporation forming Nikko Citi Holdings Inc. On June 15, 2009, Nikko Cordial Securities De-merger Preparatory Company Ltd was formed. This is considered the legal entity of the firm up to 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. Then Citigroup sold the firm to the

Sumitomo Mitsui Banking Corporation is a Japanese multinational banking and financial services institution headquartered in Yurakucho, Chiyoda, Tokyo, Japan. The group operates in retail, corporate, and investment banking segment worldwide. It provides financial products and ser ...

. In 2011, the firm changed its name from Nikko Cordial Securities to SMBC Nikko Securities. In 2016, the firm became a wholly owned direct subsidiary of Sumitomo Mitsui Financial Group. In 2018, the firm merged with SMBC Friend Securities while continuing to use the SMBC Nikko Securities trade name.

Controversies

2012 Insider Trading Fine

In April 2012, the

Financial Services Agency The is a Japanese government agency and an integrated financial regulator responsible for overseeing banking, securities and exchange, and insurance sectors in order to ensure the stability of the financial system of Japan. The agency operates w ...

fined the firm for leaking information about a

stock offering A public offering is the offering of securities of a company or a similar corporation to the public. Generally, the securities are to be listed on a stock exchange. In most jurisdictions, a public offering requires the issuing company to publish a ...

which was considered

insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information ...

. 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. 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.

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. The firm was suspected of using its

proprietary trading Proprietary trading (also known as prop trading) occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money (instead of using depositors' money) in order to make ...

desk to illegitimately maintain the price of stocks in block trades. The firm launched a complaint with financial regulators after a senior trader died following intensive questioning. On March 4, 2022, four employees of the firm were arrested on allegations of

market manipulation In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances ...

. The employees were Trevor Hill (Head of equity), Alexandre Avakiants (Deputy head of equity), Makoto Yamada (General manager of

equity trading A stock trader or equity trader or share trader, also called a stock investor, is a person or company involved in trading equity securities and attempting to profit from the purchase and sale of those securities. Stock traders may be an invest ...

) and Shinichiro Okazaki (General manager of structured products). The firm's President & CEO, Yuichiro Kondo issued a public apology afterwards. On March 23, 2022, SESC has called on prosecutors to extend allegations against the firm. If prosecutors accept the additional charges, three more staff from the firm could be indicted.

References

External links

Official site
{{authority control Sumitomo Mitsui Financial Group Financial services companies based in Tokyo Financial services companies established in 2009 Financial services companies of Japan 2009 establishments in Japan 2016 mergers and acquisitions