Market testing financial services in the security industry within a competitive rate structure

Date of publication: February 1, 1975

Abstract:

On the 11 September 1973 the Securities and Exchange Commission announced its decision to terminate the fixing of commission rates by stock exchanges after April 30, 1975. Termination of fixed commission rates by the SEC has introduced a competitive price environment for brokerage services. If adopted, these changes would require member firms of the New York Stock Exchange to consider establishing a varying pricing structure in accord with varying service offerings. The establishment of such plans are dependent on customer demand for services and on their price sensitivity to service bundles. This paper will describe techniques designed to allow brokerage firms to experiment with alternative price levels and service bundles under actual business conditions. A specified sequence of steps will be described to test alternative price levels and service bundles.

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