Why does the securities industry need super institutions?

category:Finance
 Why does the securities industry need super institutions?


In fact, from many signs, this policy direction is not without trace.

As early as five months before the CSRC issued the reply letter, 21 Century Capital Research Institute had already made a judgment on the trend that the securities industry is expected to breed super institutions through the report prospects of securities industry under the new trend of Supervision: super institutions are in the future.

The reason why we made this judgment at that time stems from two signals. One is that the securities industry began to implement classified supervision according to the comprehensive and professional under the role of the new equity regulations, while the shareholders requirements of the comprehensive securities companies were further improved, but the ceiling of their business development was further improved.

According to the classified supervision, compared with the professional category, the business scope of comprehensive securities companies can be extended to the fields of stock option market making, over-the-counter derivatives, stock pledge, etc.

In fact, from the business division here, we can see that the so-called professional and comprehensive names are essentially the distinction between non capital intermediary business and capital intermediary business - comprehensive securities companies have the conditions to carry out more capital intermediary business.

The key problem is that capital intermediation is to use money. Without a strong capital strength, it is impossible to have a strong capital intermediation business. Therefore, the super institution that breeds the securities industry is clearly around the corner.

The second reason is that compared with the industry risks faced by the securities industry, the size of securities companies is mostly too weak.

Data is the most intuitive embodiment. Take CITIC Securities as an example. As of the end of the third quarter of this year, its net assets and total assets were 163.738 billion yuan and 729.410 billion yuan respectively, both of which ranked first in the securities industry. However, compared with the banking industry, its scale index even lagged behind many city commercial banks.

In terms of net assets, CITIC Securities is less than the Bank of Shanghai in the same period; in terms of total assets, CITIC Securities is more than 250 billion yuan behind the Bank of Hangzhou.

For example, by the end of the third quarter of this year, the total assets of the top five securities companies, CITIC, Haitong, Guojun, Huatai and Guangfa, were only 2.80 trillion yuan, ranking higher than that of Bank of Beijing and lower than that of Bank of China; the total assets of the 50 listed securities companies in the same period were 6.95 trillion yuan, just exceeding that of CITIC Bank and lagging behind that of Shanghai Pudong Development Bank.

The scale of accumulated poverty and weakness often makes the securities industry helpless when facing risks.

In the period of violent stock shocks in 2015, regulators had to rely on the reinforcements of commercial banks and the liquidity support of the central bank to provide endorsement;

In the face of the risk of stock pledge explosion in 2018, local state-owned assets and rescue funds have also become a compromise option under the industrys endogenous weakness;

In 2019, when a city commercial bank was triggered by the takeover event, the credit stratification instantly reduced the securities business organization to the discriminated person in the interbank market, and finally had to use the temporary solution of the bank pays the money and the head securities firm contributes again.

The root cause of these problems is still that the securities industry with high risk transmission and strong externality lacks a super institution with sufficient strength to play the role of stabilizer in the industry. When the industry risk occurs, it has to rely on the help of external forces.

Therefore, no matter from the direction of policy efforts of the regulators, or from the starting point of preventing and resolving industry risks, the securities industry has obviously reached a point where super institutions are needed.

Source: editor in charge of economic report in the 21st century: Ren Hui, nbj9607