MLHSBC has been hit by the withdrawal of one of its parents, Merrill Lynch. The news is a sign of the times, but is not devastating for the eBrokerage unit itself, or for HSBC. HSBC must now focus its marketing efforts squarely on its own huge global retail customer base.
Merrill Lynch has withdrawn from the fledgling MLHSBC brokerage operation.
Merrill Lynch has announced that it will withdraw from the online brokerage service it set up with HSBC in 2000. Operating out of the UK, Australia and Canada, the unit was conceived on the crest of the Internet wave, but has never fulfilled its promise.
MLHSBC has 100,000 clients, most of which were inherited from Invest Direct, HSBC’s Australian brokerage arm. However, the unit has suffered from sluggish investor interest and negative market conditions. While Merrill Lynch will continue to make its research available through the MLHSBC website, the unit will now be integrated into the HSBC Group.
Times are extremely hard for online brokerages: a crowded marketplace, coupled with tough downward pressure on dealing fees and a falling stock market have made it a tough business. However, an online brokerage arm is an important add-on service for all banks, and HSBC now has the chance to make a stronger referral link between its global retail banking business and its online brokerage arm.
One of the faults with MLHSBC up to now has been its relative isolation and stand-alone nature. By promoting the service through its branches, HSBC will be able to reach a wide and receptive audience, which should keep the business ticking over until market conditions improve.
Related research: Datamonitor, 2002: MLHSBC