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. Last Updated: 07/27/2016

U.S. Internet Broker in Japan Deal

TOKYO -- Leading U.S. Internet brokerage Charles Schwab and Japan's largest non-life insurer Tokio Marine & Fire said Wednesday they would set up a retail brokerage company for Japanese investors.

The new company, to be named at a later date, will focus on online trading but will also have retail branches.

"It is our hope that a new type of investor base will be created in the Japanese market," Gloria Lau, president of Charles Schwab Asia, said at a news conference.

The number of Internet users in Japan has doubled from last year to 20 million, the brokerage said.

With the venture Schwab is departing from its usual practice of going it alone in foreign countries. The U.S. firm said it teamed up with Tokio Marine because of the insurer's image of safety and security.

Tokio Marine said the deal, the latest in a recent wave of cross-border tie-ups between foreign and domestic firms in Japan's potentially lucrative retail brokerage business, would help it take advantage of Japan's "Big Bang" deregulation of its financial markets.

"Deregulation means a variety of new products are possible but because of a lack of expertise we needed an approach from Charles Schwab," said Katsuhiko Katayama, financial planning executive for Tokio Marine.

The brokerage will be 50 percent owned by Schwab, which will be in charge of day-to-day operations, and 30 percent to 35 percent by Tokio Marine, a member of the Mitsubishi group of companies.

Three other Mitsubishi group financial institutions - Bank of Tokyo-Mitsubishi Ltd., Mitsubishi Trust and Banking Corp. and Meiji Mutual Life Insurance - are also expected to take a combined 15 percent to 20 percent stake in the new venture.