Securities industry in China

Securities industry in China is an article on the securities industry in mainland China.


  • 1995, China’s first joint venture investment bank – China International Capital Corp (CICC) was established, shareholders included Morgan Stanley International.
  • March 2002, Changjiang Securities and BNP Paribas signed the Sino-foreign joint venture securities companies’ framework agreement, establishing the first joint-venture securities company after China entered the WTO.
  • June 2002, China Securities Regulatory Commission issued the “Establishment of Securities Companies with Foreign Equity Participation Rules”, setting the maximum stake at 33% for foreign joint venture partners. The measure was implemented on July 1, 2002.
  • 2004, Goldman Sachs Group joined with Gao Hua Securities to establish a joint venture Goldman Sachs Gao Hua Securities in order to enter China market.
  • September 2005, UBS Restructuring of Beijing Securities Project, preparation of UBS Securities was approved by the State Council. This was the first time for mainland to allow foreign institutions to own the management rights of mainland securities companies. This was also the first case for foreign institute to own the mainland securities license.
  • September 2006, China Securities Regulatory Commission (CSRC) announced a suspension on approval of new securities companies (including foreign-invested securities companies) and commercial offices.
  • May 2007, in the Second Sino-US Strategic Economic Dialogue (SED), Chinese Government promised to resume approval of new securities companies and declare a gradual expansion in the business scope of joint venture securities companies before the Third SED.
  • December 2007, CSRC announced the resume of approval of Joint-venture securities companies and qualified securities companies can apply to set up.[1]
  • July 2007, CSRC announced a new regulatory classification base on securities companies risk managing ability and classified them into A (AAA, AA, A), B (BBB,BB, B), C(CCC, CC, C), D and E 11 classes.
  • December 2007, SCRC started to launch business license management on securities companies which indicate that securities companies’ ability on risk management will directly affect their capability in business scope, especially in the innovation business license[2]
  • 2007, 17 brokerages received A-class rating, in which 2 of them are AA while 15 are A in rating.
  • July 2008, 31 brokerages received A-class rating, in which 10 of them are AA while 21 are A in rating.
  • May 26, 2009, CSRC announced a new securities regulatory classification in order to improve the existing classification criteria of securities companies. Under new regulation, 30 brokerages received A-class rating, 58 in B-class rating and 17 in C-class rating.
  • China’s securities companies are facing more fierce competitors from outside investors. Goldman Sachs, UBS and many other international foreign institutions started to set up joint venture securities companies in China.[3]


In mainland China, the China Securities Regulatory Commission is the primary regulator; however, it has delegated certain activities to a self-regulatory organization called the Securities Association of China (SAC).

Mainland China began an IPO sponsor system began in 2004, which is similar to a sponsor system in Hong Kong began in 1999.[4] In order to be publicly listed in China, a prospective listing firm must be sponsored by a securities company (investment bank) and the sponsor must assign sponsor representatives to the listing firm.[5] This In 2012, the SAC took over registration of sponsor representatives. The exam to become a sponsor representative is extremely difficult, with a one percent passing rate,[4] and sponsor representatives have been highly compensated, with $1 million annual salaries in 2010. Despite this, they are viewed as often ineffective.[4]

Equity share types and foreign investment

Mainland shares are known as A-shares and are not typically available for purchase by foreigners. B-shares are available to foreigners, but are reputed to be more risky as they are available for less desirable companies. H-shares are for mainland China companies which are traded on the Hong Kong Stock Exchange.

Institutional investors can apply to become Qualified Foreign Institutional Investors (a program which began in 2002) and then are allowed to buy A-shares; the minimum assets under management was reduced from $5 billion to $500 million in 2012.[6]

On 10 November 2017, China allowed foreign participation up to 51% in securities ventures.[7]

Local securities companies

2010, there are 106 Members of Securities Association of China[8]


Domestic rankings in 2010

  1. Sponsor representatives
RankingCompanyNo. of sponsor representativesNo. of professionals
1Guosen Securities[12]139400
3Ping An[23]84266
7China Merchants70254

2. Net brokerage revenue

RankingCompanyNet brokerage revenue (RMB 1B)Market share among top 100 brokers (%)No. of branchesNet brokerage revenue per branch (RMB 1M)
2Guotai Junan5.04.6818926.7
3Guosen Securities[12]4.94.546871.9
6Shenyin Wanguo4.44.0514929.3
7China Securities3.53.2512328.4
8Huatai Lianhe3.53.2412827.2
9China Merchants3.33.0926312.6

3. Total assets

RankingCompanyTotal assets (RMB 1B)
1Zhong Rong110.0
4Guotai Junan93.6
7China Merchants89.6
8Huatai Lianhe86.5
9China Securities66.9
10Guosen Securities[12]63.7
11Shenyin Wanguo60.2

Source: Securities Association of China[8][24]

Global rankings in 2010 & 2011Q1 1. Sponsored deals

Company2011Q1 Ranking2011Q1 Market share2010 Ranking2010Market shareChange in market share
Deutsche Bank18.6045.33.3
Barclays Capital26.80122.24.6
Goldman Sachs36.7036.70.0
Guosen Securities[12]54.10141.72.4
BoA Merrill Lynch64.0064.9-0.9
Morgan Stanley74.0018.4-4.4
DBS Group83.80390.53.3
JP Morgan93.4026.8-3.4
Ping An[23]103.00131.91.1

Source: Bloomberg


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