SMBC Nikko Securities Inc. (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 is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...

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, officially the Tokyo Metropolis, is the capital of Japan, capital and List of cities in Japan, most populous city in Japan. With a population of over 14 million in the city proper in 2023, it is List of largest cities, one of the most ...

. It is a wholly owned subsidiary of the Sumitomo Mitsui Financial Group. It is the third largest securities brokerage firm in Japan.

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 created out of the securities department of the Industrial Bank of Japan and incorporated as a stock company. 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, and the resulting company used the Nikko Securities trade name. In 2001, the firm changed its name from Nikko Securities to Nikko Cordial 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 company based in New York City. The company was formed in 1998 by the merger of Citicorp, t ...

after Citigroup purchased Nikko Cordial Corporation forming Nikko Citi Holdings Inc. In September 2009, Citigroup sold the firm to the Sumitomo Mitsui Banking Corporation. 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 fined the firm for leaking information about a stock offering 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 informati ...

. 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.

Investigation into block trade 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 customer funds) to make a profit ...

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 4 March 2022, four employees of the firm were arrested on allegations of

market manipulation In economics and finance, market manipulation occurs when someone intentionally alters the supply or demand of a security to influence its price. This can involve spreading misleading information, executing misleading trades, or manipulating ...

in connection with the same block trades. 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 product A structured product, also known as a market-linked investment, is a pre-packaged structured finance investment strategy based on a single security, a basket of securities, options, indices, commodities, debt issuance or foreign currencies, an ...

s). The firm's President & CEO, Yuichiro Kondo issued a public apology afterwards. On 24 March 2022, prosecutors arrested a vice president of the firm and brought criminal charges against the company and five bankers. On 13 April, prosecutors charged the vice president and filed new criminal charges against the firm. On 14 February 2023, a court ordered SMBC Nikko Securities to pay a fine of 700 million yen ($5.3 million) and an additional penalty of around 4.47 billion yen for manipulating stock prices.

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