Editor's note: "Investor-centric" is the biggest theme of the securities industry in 2023, which is manifested in the transformation from "approvability" to "investability" for the listing of sponsor companies...... Only by deeply grasping the people's nature of financial work and not forgetting the original intention of benefiting the people can securities companies achieve steady and far-reaching results.
This also forces the securities industry to return to its origins, re-examine the operation and management and service methods of institutions, abandon the past practices such as blind pursuit of economic interests, excessive marketing, and killing chickens and eggs, explore new paths for business model transformation, serve the national strategy, and achieve high-quality development.
Today, the Securities Times launched the top ten news in the securities industry, recording the upcoming 2023.
The reform of public offering rates has hit the securities industry
The reform of public fund rates in 2023 has attracted much attention. The regulator's two rounds of reforms that directly hit the blockages, pain points, and difficulties have stirred up the securities industry, on the one hand, practicing "finance for the people", and on the other hand, promoting the securities industry to return to its origins.
In July this year, the China Securities Regulatory Commission (CSRC) announced the "Work Plan for the Reform of Rates in the Public Fund Industry", and in December, it solicited opinions on the "Provisions on Strengthening the Administration of Securities Transactions of Publicly Offered Securities Investment Funds".
According to the analysis of industry insiders, in the short term, the income of securities companies may be affected by "three consecutive impacts": first, the income of fund subsidiaries has declined; second, the share of management fees charged by brokerages for fund retention scale has shrunk; and third, the scale of sub-position commissions will be reduced by one-third. In the long run, the high-quality development of the securities industry will take a solid step, the business model of "fund sales for trading commissions" of securities companies for many years may be subverted, wealth management will truly return to the origin of customer-centricity, and the buy-side investment advisory model is expected to thrive.
At the same time, the business pattern of sell-side research will also undergo far-reaching changes, and the industry reshuffle will intensify in the short term, and the survival space of small and medium-sized sell-side institutions will be squeezed. In the long run, the securities research institute will pay more attention to research capabilities, reduce costs and increase efficiency, strengthen internal services, and explore more ways to cash in research services.
The era of comprehensive registration system emphasizes "investability"
In February 2023, the comprehensive registration-based reform was officially implemented, marking a new stage in A-share issuance, and the inclusiveness of its system design provides more business opportunities for investment banks.
However, the comprehensive registration system "does not mean that whoever wants to send it will send it, and send as much as it wants", nor does it mean that the quality requirements are relaxed. This requires securities firms and investment banks to deeply understand the connotation of the registration system "with information disclosure as the core", and follow the industry logic to "select projects from the perspective of investment".
In July this year, the Shanghai and Shenzhen Stock Exchanges issued the "Implementation Measures for the Evaluation of the Practice Quality of Sponsor Institutions Guided by the Quality of Listed Companies (Trial)", which is a milestone, and the era of "only guaranteeing but not recommending" has become a thing of the past. The document aims to accelerate the transformation of sponsors from the concept of "approvability" to "investability".
In addition to the change of concept, investment banks should comprehensively improve their practice capabilities, grasp the strategic opportunity of the comprehensive registration system, improve their core competitiveness such as industry research, value discovery, quality control, customer service, and direct investment, and promote the channel business to transform into a comprehensive service for the whole life cycle.
Reduce costs and increase efficiency, strengthen assessment
With the changes in the market environment and regulatory environment, reducing costs and increasing efficiency has become the "main theme" of the securities industry this year.
Downshifting business trip standards and customer entertainment expense standards is nothing new. A brokerage research institute also reported that the three-year taxi fare was reversed, mainly because some employees had private taxi fares, and the company had not strictly inspected the reimbursement reasons before. At the same time, different business lines of securities companies have strengthened performance appraisal, strictly checked attendance, and opened the elimination of the last position.
In the context of "performance rises, salaries rise, performance falls, salaries fall", the "securities industry salary cut tide" that has attracted much market attention has appeared.
According to the data of listed securities companies in 2022 previously counted by the Securities Times reporter, it was found that "ultra-high-paid" executives have become a thing of the past, and "annual salary of 10 million" has disappeared, while the average average salary of employees is 483,000 yuan, a year-on-year decrease of nearly 20%. This year, the reporter also learned that the monthly fixed salary of employees of some large brokerages is facing a general reduction.
股权融资遭遇“827新政”
The turn of the equity financing market in the middle of this year will undoubtedly have an impact on the income of brokers. On August 27, the China Securities Regulatory Commission announced that it would tighten the pace of IPOs (initial offerings) in stages according to market conditions, promote the dynamic balance between investment and financing, and also impose some restrictions on the refinancing behavior of listed companies, which is known as the "827 New Deal" by market participants.
Since the regulator proposed the counter-cyclical adjustment of the primary and secondary markets, the scale of A-share equity financing has declined significantly. Wind data shows that from September to November this year, the scale of A-share equity financing was 55.1 billion yuan, 40.4 billion yuan and 48.3 billion yuan respectively, equivalent to only one-third of the 154.5 billion yuan in August, and the number of financing enterprises was halved.
In the short term, the investment banking business income of securities companies has been greatly affected. The performance of 43 listed securities companies in the third quarter has shown "clues", Flush iFinD data shows that more than seventy percent of brokerages in the first three quarters of the net income of investment banking business fees declined, some large brokerages fell by more than 30%, and small and medium-sized brokerages were more impacted, with some of them decreasing by more than 70%.
However, in the medium to long term, there is still room for growth in the mainland equity financing market, and the securitization rate in line with national strategic areas is expected to increase significantly in the next five years. The securities firms emphasized that it is necessary to further strengthen internal investment and research collaboration and human resource advantages, stretch the industrial service chain, and fully tap the potential customers in various segments of key industries and in different life cycles.
The pilot of fund investment consulting has been regularized
How to help investors make personalized asset allocation from the perspective of customers has become a topic for all parties to explore. The construction of a buy-side investment advisory model is of great significance to the transformation of brokerage wealth management.
The industry's exploration of this model started with "fund investment advisory", and after more than three years of pilot, the fund investment advisory business has grown rapidly. On June 9, the China Securities Regulatory Commission (CSRC) issued the "Regulations on the Administration of Investment Advisory Business of Publicly Offered Securities Investment Funds (Draft for Comments)", which plans to promote the pilot transformation of fund investment advisory business into a regular one, which will undoubtedly provide more institutions committed to the transformation of buy-side investment advisors with a business grasp and a mature business model.
Encourage the capital-saving road
The trend of "blood replenishment" of brokerages will change significantly in 2023. In January this year, the China Securities Regulatory Commission advocated that securities companies focus on their main responsibilities and main businesses, and take the road of capital-saving and high-quality development.
In response to the call of the regulatory authorities, two leading securities firms have taken the initiative to terminate the 10 billion yuan allotment plan. A number of securities firms revised their private placement plans, or reduced the scale of financing, or adjusted the direction of capital investment. In terms of IPO (initial offering), except for the successful listing of Cinda Securities at the beginning of this year, the review of six securities companies to be listed has been slow. Due to the difficulty in promoting equity financing, securities companies mainly raised funds through bond issuance this year. During the year, the scale of bond issuance hit a new high, exceeding one trillion yuan, and 2023 will also become a big year for securities companies to issue bonds.
In addition to restricting large-scale refinancing, improving the efficiency of the use of existing funds is also the direction of regulatory encouragement. In November 2023, the China Securities Regulatory Commission (CSRC) solicited public comments on the revision of the Provisions on the Calculation Standards for Risk Control Indicators of Securities Companies. The draft supports compliance and stable high-quality securities firms to appropriately expand capital space, improve the efficiency of capital use, and become better and stronger.
Stamp duty and transaction handling fees will be reduced
The regulator issued a package of policies in August to alleviate market pressure, which has attracted much attention from the market, which has had an impact on the stock price performance of the brokerage sector and the brokerage industry.
It is understood that under the guidance of the China Securities Regulatory Commission, the Shanghai and Shenzhen North Stock Exchanges further reduced the securities transaction handling fees in August, of which the Shanghai and Shenzhen Stock Exchange stock trading handling fees were reduced by 30%, and the Beijing Stock Exchange stock trading handling fees were reduced by 50%. The brokerages have responded and effectively transmitted the policy effect of the reduction of securities transaction handling fees to the majority of investors.
In the same month, the Ministry of Finance and the State Administration of Taxation announced that the stamp duty on securities transactions would be halved, reflecting the country's determination to boost the capital market. The above policies will help attract more investors to participate in stock market trading and enhance market vitality. A number of brokerage analysts believe that this will help boost the market performance of brokerage stocks.
Obviously, activating the capital market is not an expedient measure, but a key step in economic construction, and the role of the capital market in promoting economic growth and residents' wealth creation has been further explored and recognized.
The anti-corruption efforts of the securities industry are unprecedented
Since the beginning of this year, the securities industry has launched a heavy anti-corruption attack, and a number of cadres of the securities regulatory system or senior executives of securities companies have been taken away for investigation one after another. Prior to this, the Central Financial Work Conference pointed out that financial chaos and corruption have persisted.
According to the reporter's analysis, some of the relevant anti-corruption targets have many years of regulatory work experience, and were investigated after "going to sea" or serving in the government or conference management units for many years, while some have been working in securities companies for a long time and are eventually involved in corruption cases. In January, Feng Henian, the former chairman of Minsheng Securities, who had worked at the China Securities Regulatory Commission for 18 years, was expelled from the party. Subsequently, Li Geping, former general manager of China Securities Securities, Zhu Congjiu, vice chairman of the Zhejiang Provincial Committee of the Chinese People's Political Consultative Conference, An Qingsong, former president of the China Futures Association, and Liu Wei, former deputy general manager of the Shanghai Stock Exchange, were investigated one after another, all of whom have experience in performing their duties in regulatory departments. In terms of enterprises, for example, Chen Gongyan, the former chairman of Galaxy Securities, was investigated after retirement, which also shocked the industry.
People in the industry believe that on the long road of financial anti-corruption, the securities industry has shown firm determination and sustained efforts. The investigation and punishment of a series of key figures shows the regulator's zero-tolerance stance on power rent-seeking and financial corruption.
The M&A process accelerated
In recent years, the Matthew effect in the securities industry has become prominent, and the profitability of leading brokerages and small and medium-sized brokerages has been quite different, and the curtain of industry reshuffle has opened again. In the context of industry profit differentiation, with the release of positive statements by regulatory policies again this year, the process of mergers and acquisitions in the securities industry is expected to accelerate.
In October this year, the Central Financial Work Conference mentioned "cultivating first-class investment banks and investment institutions". Subsequently, the China Securities Regulatory Commission (CSRC) expressed its support for leading securities firms to become better and stronger through business innovation, mergers and acquisitions, and other means, and guided small and medium-sized institutions to combine their resource endowments and professional capabilities such as shareholder backgrounds and regional advantages to do fine.
It is reported that in December, the China Securities Regulatory Commission approved the change of Minsheng Securities to the main shareholder of Wuxi Guolian Group, and the matter lasted only 8 months from the submission of application materials to the approval and approval. Hua Chuang Securities' acquisition of the equity of Pacific Securities also ushered in the latest review progress in the same month, and received feedback from the China Securities Regulatory Commission. Also in December, Zheshang Securities announced that it would select Guodu Securities as the next M&A target.
In the context of accelerating the construction of a financial power, the wave of mergers and acquisitions of securities companies supported by regulatory authorities is expected to rise again.
Brokerages focus on the market business of the Beijing Stock Exchange
On September 1, the China Securities Regulatory Commission issued the "Opinions on the High-quality Construction of the Beijing Stock Exchange", which plans to significantly improve the market size, efficiency, quality, function, activity and stability of the Beijing Stock Exchange.
This reform not only opens up more space for the high-quality development of the Beijing Stock Exchange, but also opens up a new battlefield and provides new development momentum for the securities industry. Since September this year, a number of securities companies have stepped up the formulation of internal work plans, accelerated preparations, increased publicity and promotion, and conveyed the latest system, investment opportunities and investment logic of the Beijing Stock Exchange market to the market.
At the investment banking level, brokerages are actively stockpiling projects listed on the Beijing Stock Exchange, and some leading brokerages are competing for business. In terms of account opening, with the adjustment of investor suitability conditions and the money-making effect of the secondary market of the Beijing Stock Exchange, securities companies have vigorously promoted account opening by adjusting the assessment mechanism, salary incentives, internal branch rankings, financial technology and other measures. In terms of market making, many brokerages have applied for the market-making qualification of the Beijing Stock Exchange, and the market makers of the Beijing Stock Exchange are expected to further expand. In addition, there are also securities companies from the investment side, the establishment of the Beijing Stock Exchange equity investment fund, etc.
Photo courtesy of this edition: Picture Worm Creative
Written by Tan Chudan, Liu Yiwen, Sun Xiangfeng, Hu Feijun, Xu Ying, Wang Rui
![Business model planning scheme of a well-known electrical appliance group (BT version)[fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)