There are also securities firms applying for the qualification of market-making business on the Beijing Stock Exchange. On April 12, the China Securities Regulatory Commission issued feedback on Capital Securities and Caixin Securities' application for the qualification of stock market-making business on the Beijing Stock Exchange. Previously, a number of brokerages such as Kaiyuan Securities and Guoyuan Securities announced their intention to apply for the qualification of market-making business on the Beijing Stock Exchange. Since February 2023, the stock market-making trading business of the Beijing Stock Exchange has been officially launched, and 15 securities companies have become the first batch of market makers, and up to now, the team of market makers on the Beijing Stock Exchange has been expanded to 16. The regulator also previously said that it would expand the team of market makers on the Beijing Stock Exchange. In the view of industry insiders, the introduction of the market maker mechanism will help promote the increase of trading activity on the Beijing Stock Exchange, and also improve the trading volume and valuation level of the Beijing Stock Exchange to a certain extent, which is conducive to the development of the industry.
A number of securities firms have applied for market-making qualifications on the Beijing Stock Exchange
Two brokerages have recently received feedback on their qualifications for stock market-making business on the Beijing Stock Exchange. On April 12, the China Securities Regulatory Commission (CSRC) issued feedback on Capital Securities' application for the qualification of stock market-making business on the Beijing Stock Exchange, and asked Capital Securities to explain that Capital Group's scale, revenue, and profit in the past three years have been at the forefront of the industry, and to explain whether the company's team engaged in stock market-making trading on the Beijing Stock Exchange are all dedicated to the market-making business of the Beijing Stock Exchange. At the same time, the China Securities Regulatory Commission (CSRC) requested Capital Securities to provide additional information on the scale of market-making business to be carried out on the Beijing Stock Exchange and the market-making business of the New Third Board in 2023.
At the same time on April 12, the China Securities Regulatory Commission also issued feedback on Caixin Securities' application for the qualification of stock market-making business on the Beijing Stock Exchange, and at the same time required Caixin Securities to explain the consideration and feasibility of the Shenzhen Branch to assume the compliance and risk management functions of the company's market-making business on the Beijing Stock Exchange, clarify the responsibility boundary between the Shenzhen Branch and the Risk Management Department, provide supporting materials for the 2022 New Third Board market-making business ranking, and require that the 2023 ranking be provided together, and supplement the personnel composition of the proprietary investment decision-making committee and the market-making business core team.
According to the official website of the China Securities Regulatory Commission, the above-mentioned application materials of Capital Securities were accepted by the China Securities Regulatory Commission on December 8, 2023 and accepted on March 29, 2024. Caixin Securities' application was accepted on 11 December 2023 and accepted on 29 March 2024.
In addition to the above two brokerages, a number of brokerages have previously announced their intention to apply for the qualification of market-making business on the Beijing Stock Exchange. For example, on March 30, Southwest Securities announced that the company's board of directors meeting agreed to the company's application for the qualification of stock market-making trading business on the Beijing Stock Exchange. On March 27, the board of directors of Western Securities also agreed that the company would carry out the market-making business of stocks on the Beijing Stock Exchange. However, the relevant business needs to be carried out in accordance with relevant laws, regulations and business rules after obtaining the approval of the regulatory authorities.
In addition, according to public information, Kaiyuan Securities, Guoyuan Securities, Haitong Securities, Bohai Securities, Changjiang Securities and many other securities firms have also announced their intention to apply for the qualification of market-making business on the Beijing Stock Exchange, and the relevant work is also steadily advancing.
Regulators are actively promoting the expansion of the market maker team
Looking back on August 2023, the China Securities Regulatory Commission (CSRC) issued a document stating that it will expand the team of market makers on the Beijing Stock Exchange, allow qualified market makers on the New Third Board to participate in the market-making business of the Beijing Stock Exchange, enrich the sources of market makers' treasury shares, and improve the evaluation and incentive mechanism of market makers on the Beijing Stock Exchange.
On September 1 of the same year, the "Opinions of the China Securities Regulatory Commission on the High-quality Construction of the Beijing Stock Exchange" was released, and the relevant person in charge of the China Securities Regulatory Commission also mentioned that it is planned to formulate market maker qualification requirements that are more compatible with the market characteristics of the Beijing Stock Exchange, and allow qualified market makers on the New Third Board to participate in the market-making business of the Beijing Stock Exchange and expand the number of market makers on the Beijing Stock Exchange. In the future, we will also study the introduction of private equity funds to carry out market-making trading business on the Beijing Stock Exchange.
At the same time on September 1, the China Securities Regulatory Commission issued the "Special Provisions on the Market-making Business of Securities Companies on the Beijing Stock Exchange", which also lowered the threshold for market makers on the Beijing Stock Exchange. For example, the net capital of a market maker has been adjusted from RMB10 billion to RMB5 billion, and the classification rating of Class A has been adjusted for three consecutive years to the classification rating of Class A (inclusive) for one year in the past three years, and the classification rating of Class B BB (inclusive) or above in the past one year. At the same time, two new indicators related to the Beijing Stock Exchange have been added, such as the top 20 in the number of listed companies sponsored by the Beijing Stock Exchange or the top 50 in the market making turnover of the New Third Board in the last one year.
In the view of Yang Delong, chief economist of Qianhai Open Source Fund, the main purpose of the regulatory authorities to promote the expansion of the Beijing Stock Exchange's market maker team is to activate the market, because the trading volume of the Beijing Stock Exchange is relatively small, and the number of investors participating is also small, the introduction of the market maker mechanism will help promote the improvement of trading activity, and also improve the trading volume and valuation level of the Beijing Stock Exchange to a certain extent, thereby benefiting the development of the industry.
Since February 2023, the stock market-making trading business of the Beijing Stock Exchange has been officially launched, and 15 securities companies have become the first batch of market makers, and up to now, the team of market makers on the Beijing Stock Exchange has been expanded to 16. In January 2024, the Beijing Stock Exchange released the results of the 2023 annual evaluation of market makers, showing that the best market maker of the year is Guojin Securities, and the outstanding market makers of the year are SDIC Securities and CITIC Securities. Galaxy Securities, Industrial Securities, Soochow Securities, China Securities Construction Investment, Shenwan Hongyuan and other five market makers who participated in the first batch of market making on the Beijing Stock Exchange and had a high market making scale were also awarded the "Pioneer Market Maker" award.
According to the latest data on the official website of the Beijing Stock Exchange, as of now, Guojin Securities ranks first with 50 market-making orders ahead of the rest of the institutions, followed by CITIC Securities and SDIC Securities with 46 and 43 respectively. In addition, the current number of market-making exceeds 10 Galaxy Securities, Industrial Securities, and Soochow Securities, with 19, 13, and 10 respectively. At the same time, there are also some leading brokerages with a small number of market-making on the Beijing Stock Exchange, such as Huatai Securities, which has only completed 1 market-making order, and China Merchants Securities and CICC have only completed 2 orders.
Guo Shiliang, a financial commentator, said that with the continuous development of the Beijing Stock Exchange and the continuous development of related new businesses, the market-making business of the Beijing Stock Exchange has become one of the new businesses of brokers. However, the IPO situation and financing amount of the Beijing Stock Exchange depend on changes in the market environment, the current IPO tightening, the brokerage sponsorship business is affected, if the market environment improves in the future or is expected to enhance the incremental performance of the brokerage business, the impact of the market environment on the brokerage business is also relatively obvious.
Yang Delong also mentioned that since the market maker business of the Beijing Stock Exchange is still in its infancy, there are still problems such as the small number of market makers and the number of investors involved, and the related business still needs to be gradually improved.
Beijing Business Daily reporter Li Haiyuan