After a lapse of five months, the public offering fee reform continued to advance and entered the second stage.
On December 8, the China Securities Regulatory Commission (CSRC) researched and formulated the "Provisions on Strengthening the Management of Public Offering Investment Transactions (Draft for Comments)" (hereinafter referred to as the "Regulations"), which proposed to reasonably reduce the transaction commission rate of the public offering, reduce the upper limit of the transaction commission distribution ratio and comprehensively strengthen the supervision of the transaction commission distribution behavior.
Some market views point out that after the implementation of the "Regulations", the commission income of securities companies is expected to drop by about 33%, but the impact on the overall performance of securities companies is limited. In the long run, the reform of commission rates will lead to more market-oriented and transparent commission distribution, and the business of brokerage institutions will be more integrated.
Commission income declined.
Specifically, the "Provisions" pointed out that the transaction commission rate of the public offering should be reasonably reduced, and the transaction commission rate of the passive type shall not exceed the average transaction commission rate of the market in principle, and other expenses such as research services shall not be paid through the transaction commission;For other types of research services paid through trading commissions, the transaction commission rate shall not exceed twice the market average transaction commission rate in principle.
At the same time, if the transaction commission rate agreed between the manager and the company is higher than the relevant regulations, the adjustment of the transaction commission rate shall be completed within three months.
The "Provisions" also clearly reduce the upper limit of the transaction commission distribution ratio, and maintain the upper limit of the commission distribution ratio of 30% for managers with a management scale of less than 1 billion yuanFor managers with a management scale of more than 1 billion yuan, the upper limit of the commission distribution ratio will be reduced from 30% to 15%. At the same time, the **manager management of the brokerage trading model**, in principle, does not apply to the commission distribution ratio provisions.
The analysis of the research report of Zheshang ** on December 10 pointed out that the performance of brokerages from the public offering is mainly in four aspects, one is the income from the sale of financial products, and the income of brokerage sales mainly includes subscription fees and trailing commissions. The second is the channel commission, and there is a phenomenon that part of the transaction commission is paid to the channel in the market. The third is the contribution of participating in the public offering, and the brokerage company is more active in the public offering field, and the ** companies under a number of listed securities companies have made considerable profit contributions to it. In the first half of 2023, the total trading commission income of brokerages in the industry will be 9.6 billion yuan, and some ** companies will allocate a relatively high proportion of commissions to their brokerage shareholders.
The rate reduction will lead to a certain decline in brokerage income. According to the calculation of the CITIC** research team, the current gross commission rate of A** is 2/10,000** (the net commission rate is calculated according to the data in January and June 2023, and the handling fee and securities management fee are calculated according to the latest level after the reduction in August). Taking into account only commission rate adjustments, it is expected that the size of the commission for the rental of seats in the A** field could increase from 188 in 2022700 million yuan fell to 126400 million yuan, a decrease of 33%. In the first half of 2023, seat leasing commissions accounted for 4 percent of the industry's total revenue3%, it is expected that the fee reduction will affect the income of the ** industry 14%。
Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center of the International Business School of Zhejiang University, told Yicai that the reduction of commission rates and the reduction of the upper limit of distribution are to benefit public investors, and try to leave more wealth for public offerings by reducing the mode of profit distribution of companies, which will reduce the business income of brokers, but if it can activate the enthusiasm of public investors, it can be used to make up for the negative impact of the commission reduction.
* Transparency of transaction mode.
In addition to reducing the rate and distribution ratio, the "Provisions" also make clear provisions on the supervision of transaction commission distribution. It is strictly forbidden to link the selection of the company, the leasing of trading units, the distribution of transaction commissions, etc. with the scale of sales and holdings, and it is strictly forbidden to promise the company in any form the trading volume and commissions or use the transaction commissions to exchange interests with the company, and it is strictly forbidden to use the transaction commissions to transfer and pay fees to third parties.
At the same time, strengthen the management of the best managers. A business isolation mechanism should be established, and sales personnel shall not participate in business links such as company selection, agreement signing, service evaluation, and transaction commission distribution. It is strictly forbidden to use the highest trading volume and transaction commission as the assessment indicators of the sales department, branches, and sales personnel, and clarify the information disclosure requirements of the first manager.
From the point of view of the cooperation model between the brokerage and the brokerage, the exchange of interests between the company and the brokerage can be reduced, and the cooperation model between the brokerage and the brokerage will reduce human interference and be more transparent. Pan and Lin said.
Strengthening the supervision of trading behavior will be conducive to the healthy development of the industry. Guotai Junan's non-banking team believes that it is expected that the concentration of transaction commissions will decrease, the use of transaction commissions will be more transparent, and the scenarios will be standardized to research services, and scenarios such as sales and third-party transfer payments will no longer exist.
The CITIC** research team pointed out that the reform of compliance management is conducive to promoting the trend of transaction commission payment with research capabilities as the core, which has an adverse impact on securities firms with a high dependence on sales commissions, and the wealth management business model with agency sales as the core is expected to usher in a transformation. The optimization of information disclosure is conducive to reducing the risk of benefit transmission in the capital market and improving the holding experience of investors. At the same time, through the consolidation of the responsibilities of the first manager and custodian, it is conducive to strengthening the external supervision of the public offering and promoting the high-quality development of the public offering industry through multiple channels.
The research business is under shock.
In addition, the commission income of sub-position represents the comprehensive research ability of brokerages to a certain extent, and the rate reform will also have a certain impact on the research business of brokerages.
In terms of research business, the non-bank team of Zheshang pointed out that in the short term, if the new regulations are implemented, transaction commissions cannot be used to pay for sales services, and the total scale of research commissions in the market may increase slightly in the short term. In the long run, ** companies may favor the bond settlement model, and the transaction commission will still be distributed among multiple departments, and the commission income of the institute may decline.
As of the end of the third quarter of 2023, 35 of the 155 issued** and hybrid** public offering licensees are exempt from the latest restrictions on commission concentration. The CITIC research team pointed out that for small and medium-sized sell-side research institutions, the decline in the concentration of commission distribution is conducive to their efforts to strive for a higher market share among large and medium-sized companies. For large sell-side research institutions, promoting the development of securities settlement business and consolidating their market share is expected to become the main choice for subsequent transformation.
At the same time, the research team of CITIC ** emphasized that the commission concentration of the company's asset management subsidiaries is significantly higher than the market average, and whether the asset management subsidiaries that have obtained public offering licenses are subject to the latest concentration requirements should be clarified.
As far as brokerage institutions are concerned, how to deal with the impact of fee reform in the future?In terms of business income model, the Soochow ** non-bank team expects that in the future, the income model of brokerage research business will be transformed from a single commission income to a comprehensive business income.
Guotai Junan's non-banking team pointed out that the services of securities institutions will become integrated and professional, the transformation of wealth management from "flow" to "stock" will be accelerated, and the asset management scale and investment advisory services will become the commanding heights of competition in the future.
An interviewee told Yicai that the reform of public offering rates will promote the adjustment of the business structure of securities companies and improve their overall competitiveness. First of all, the reform will promote securities companies to optimize their business layout, increase investment in wealth management, investment consulting and other businesses, and seek business transformation and upgrading. Secondly, brokerages will pay more attention to the application of financial technology to improve business efficiency and reduce operating costs. In addition, brokerages may increase research and investment in innovative businesses, such as the Science and Technology Innovation Board and derivatives, in order to seek new business growth points.