The supervision of stock pledge has been increased. In February, six securities firms received regulatory letters. Five issues should be noted

 The supervision of stock pledge has been increased. In February, six securities firms received regulatory letters. Five issues should be noted

Since August, six securities firms, such as Guosheng Securities and Nanjing Securities, have encountered regulatory letters due to the issue of equity pledge, and most of the problems are consistent with the notification. However, there are still some problems that have not been claimed after the registration, and the securities companies that encounter regulatory measures in the follow-up may still increase.

Penalty for 0.56% of pledges exceeding the limit

Before the National Day, Guosheng Securities received a regulatory letter from Jiangxi Securities Regulatory Bureau, joining a group of difficult brothers and difficult brothers who were subject to supervision because of equity pledge.

Specifically, Guosheng Securities violated the rules: on August 29, 2018, Guosheng Securities dealt with the pledge business for Song Ruis shares, which was marked as Yuntu Holdings. The pledge number was 57.5 million shares and the financing amount was 100 million yuan. After the pledge was completed, the overall pledge ratio of Yuntu Holding Market was 48.56%, which exceeded the risk limit set by Guosheng Securities Risk Management Committee that the overall pledge ratio of single A-share stock market to its A-share capital was less than 48%.

According to public information, Song Rui is the actual controller and the largest shareholder of Yuntu Holdings, holding 38.94% of the shares before the end of 2018. Earlier, Song Rui had pledged shares of Yuntu Holdings in Hongta Securities and Huaxi Securities on many occasions. Mou Jiayun, the second largest shareholder of Yuntu Holdings, holds 12.2% of the shares, and its pledge is also frequent. In this case, Guosheng Securities inadvertently cross-line situation can be imagined.

However, in recent years, Guosheng Securities stock pledge business scale has indeed increased. According to the semi-annual report of Guosheng Golden Control, the scale of stock pledge business of Guosheng Securities in the first half of the year was 4.448 billion yuan, an increase of 20.84% over the beginning of the year. According to the statistics of the China Securities Association, the income of interest on pledge of shares in Guosheng Securities in the first half of the year was 138 million yuan, an increase of 43.25% over the previous year, ranking in the top ten camps.

Six securities firms were named for pledge of shares

Last month, the Securities Regulatory Commission issued the Institutional Regulation Bulletin, once again on the issue of equity pledge knock down the mountain and shock the tiger. At that time, the circular showed that the recent supervision carried out on-site verification on nine companies whose share pledge scale has increased greatly in recent years. Now, the results of supervision and inspection of relevant companies are coming out one after another.


Guangdong Securities Regulatory Bureau - Wanlian Securities: In the course of stock pledge repurchase transactions, due diligence on the integration side has major defects.

Shaanxi Securities Regulatory Bureau-China Post Securities: No corresponding internal system has been formulated to adjust the standard of specific pledge rate for each project. The estimation of specific pledge rate is arbitrary and the system is imperfect; the specific investment and use of customersfinancing purposes have not been tracked into other accounts of customers, and the tracking and verification workers have not been shown in the After-Loan Tracking Report submitted by relevant branches. Make specific case

Shenzhen Securities Regulatory Bureau - British Securities: Since March 2018, the stock pledge repurchase trading business has some problems, such as inadequate due diligence, inadequate management of the securities with the target and the integration party, and inadequate performance of the life management responsibilities.

Hunan Securities Regulatory Bureau - Fortune Securities: In the course of carrying out stock pledge business, it fails to track the operation, finance, external guarantees and lawsuits of the integration party continuously and effectively during the period of repurchase.

Nanjing Securities, Jiangsu Securities Regulatory Bureau: In carrying out stock pledge repurchase transactions, there are some problems, such as inadequate due diligence on the entry of the integration party and imperfect management of the financing funds.

Since the data of equity pledge scale of various securities firms are not disclosed, but the interest income of the stock pledge business in the past half year shows that most of the above companies are among the top in the industry. Data from the China Securities Association show that in the first half of this year, China Post securities realized 64.24 million yuan in interest income on stock pledge, an increase of 133.66% compared with the same period last year, and the growth rate was in the top five. In addition, Guosheng Securities, Nanjing Securities and Wealth Securities all increased by more than 30%.

It is not difficult to find that in the first half of this year, small and medium-sized securities firms have played a particularly significant role in the equity pledge business. In contrast, the business of a group of head securities has been compressed, and the pledge of shares has been taken as the key control object. Some securities firms clearly stated in the semi-annual report that the company took the initiative to reduce the scale of stock pledge and actively mitigate risks through various ways. During the reporting period, the balance of stock pledge business contracted by nearly one third compared with the historical peak.

For example, as the only listed securities firm among the six securities firms that encountered the regulatory letter, Nanjing Securities intends to use 2.5 billion yuan for credit transactions including margin trading and stock pledge repurchase business in its 6 billion yuan fixed growth plan. At that time, Nanjing Securities said that credit businesses such as margin trading and stock pledge repurchase transactions were the growth points of company profits, but compared with other large and medium-sized securities firms, the companys business scale was smaller and the proportion of business income was not high, and the scale and conversion rate needed to be further improved.

Industry regulation is increasing

From the perspective of the industry, the stock pledge business of securities firms has been pulled back recently.

According to the August financial operation briefing data issued by the Pre-Festival Association, the stock pledge balance of securities companies in August 2019 was 505.760 billion yuan, down 1.28% annually, down 18.18% from the scale at the beginning of the year; the income of interest on stock pledge was 2.814 billion yuan, down 398 percentage points annually.

Photo Source: Wind

The analysis report of stock pledge repurchase issued by Shenzhen Stock Exchange points out that the scale of stock pledge repurchase business in Shenzhen and Shanghai Stock Exchange has been declining continuously, the coverage of relief has been further expanded, and the risk of liquidation can be controlled, but the credit risk of controlling shareholders of some listed companies needs to be further mitigated. All parties still need to work together to resolve the credit risk of controlling shareholdersstock pledge. Shareholders should revere the market and deal with the risk early. Securities companies should give full play to their comprehensive advantages and combine shareholders rescue with improving the quality of listed companies.

Previously, in the Institutional Supervision Circular, the regulatory authorities highlighted five major issues in the securities companiesstock pledge business in the near future:

First, business positioning is not clear, blind pursuit of interests. Some securities companies regard on-the-spot stock pledge trading as a transactional business, neglecting credit risk management and pursuing interests blindly.

Second, the risk awareness is not strong and the risk control measures are insufficient. Individual securities companies still simply determine the amount of financing according to a certain pledge rate. They do not strictly control the credit evaluation, the source of repayment and the flow of funds of the integration party. A large number of new pledges with restricted shares as the target are added.

Third, the audit control is not strict and the pledge rate is not set rigorously. The evaluation results of some projects of individual companies are conditional consent, but it is not clear whether the relevant conditions have been implemented in the follow-up; individual companies have not formulated the pledge rate setting standards according to the new regulations, and the pledge rate setting is more arbitrary.

Fourth, due diligence is incomplete, or even lack of due diligence. Individual companies have not formed due diligence reports for extended projects. Some projects lack necessary traces such as photographs and interview records. Some interviews lack signatures of interviewees. There are doubts about the validity and authenticity of due diligence.

Fifthly, risk management after loan is formalized. Some companies follow and verify the use of funds in the form of workflow, for funds from a special account, but not into the name of the financier agreed accounts, the company failed to find out in time. Individual companies only use telephone communication for post-loan management, and there is no trace of communication record, so it is difficult to guarantee the effect of post-loan management.

Source: China Responsible Editor of Securities Dealers: Yang Bin_NF4368