Broadridge Financial Solutions (NYSE: BR) provides outsourced record keeping to the financial industry. This system frees companies from the complex requirements set forth by regulatory agencies, such as the SEC, regarding disclosure filings and securities transactions. In addition, the company processes security transactions.
The decline in trading volumes and the reduction in market liquidity associated with the current financial crisis threatens Broadridge’s earnings. Moreover, as the company serves eight of the top 10 broker-dealers,  further consolidation in financial services poses a significant risk by decreasing the number of company clients. However, Broadridge stands to benefit from increased compliance revenues (due to more required filings and disclosures) brought on by recent government intervention in the financial markets. 
Broadridge offers a complete portfolio of outsourcing services to the financial services industry, including investor communications such as proxy mailing and vote processing, automated security processing, and transaction services. The company’s clients include broker-dealers (companies that trade securities for clients and internal profit), mutual funds, institutional investors, trading companies, and annuity companies.
Previously, Broadridge formed the Brokerage Services division of ADP, a company that specializes in payroll processing. However, on March 29, 2007, Broadridge spun-off from ADP to form a new company. In the spinoff, ADP charged Broadridge with more than $600 million in debt.  To address this issue, management has focused on shareholder returns by decreasing the company’s debt and increasing the dividend ratio.
In 2009, BR generated a net income of $190.0 million on revenues of $2.21 billion. This represents a 14.9% decrease in net income and a 6.6% increase in revenues from 2008, when the company earned $223.3 million on $2.07 billion in revenue.
The Investor Communications Segment processes and distributes proxy materials, documents mandated by the SEC to inform shareholders about important events, to equity owners and mutual funds. These materials are provided in both electronic and paper formats. In addition, Broadridge supplies other regulatory documents, including tax information and important event disclosure documents, as well as account statements and trade records.
Due to the legal necessity and consistent flow of these documents, this segment provides indispensable services. At all stages in the economic cycle, companies file reorganization documents, implement institutional changes, and deal with regulatory agencies. All of these factors positively impact the Investor Communications segment.
The Securities Processing segment records, manages, and archives the trading of stocks, options, mutual funds, and fixed income securities.
As an outsourcing company for the financial services industry, Broadridge deals heavily with regulatory agencies. These agencies dictate the necessary documents, such as proxy materials and notifications of important events, that a publicly trade company must disclose. Since Broadridge handles these documents, the company’s revenues can be significantly altered by fluctuations in regulatory demands.
With the passage of a $700 billion bailout of financial services on October 3rd, 2008, the US government has assumed a new importance in the financial markets.  Moreover, European governments seem to be following suit, as the British passed a $850 billion bailout on October 8th, 2008.  In the past, increased government involvement has led to greater regulation. For example, after the accounting scandals in 2002 involving Enron and Tyco the government intervened by way of the Sarbanes-Oxley Act. The Act significantly increased regulatory disclosures and compliance costs for public companies.  Broadridge stands to gain from the additional documentation and regulatory demands implemented by government agencies.
All three of Broadridge’s segments generate transaction processing fees. In addition, interest earned from margin lending also generates substantial revenue. However, when trading volumes are down, share prices are low, and liquidity is non-existent,  Broadridge is impacted in the following ways:
Broadridge competes against firms' in-house capacities (firms deciding to hire personnel in-house rather than outsource financial record keeping) as well as other outsourcing firms. These firms provide sensitive information and services. Due to the importance of these products, outsourcing firms need a long record of trusted service. This leads to lengthy relationships between firms and clients. The following firms compete with Broadridge:
DST competes with Broadridge in information processing and computer software services. DST also provides statement and billing solutions, similar to Broadridge’s investor communications segment.
State Street offers investment operations outsourcing, recordkeeping, and transfer agency services that directly compete with Broadridge.
Fiserv also competes in the processing of financial transactions.
FIS and Broadridge compete in the financial institution processing and outsourcing market.