The main business of China's securities companies and the source of funds

China's securities company business includes the traditional brokerage, self-management and underwriting three major businesses and emerging consulting, mergers and acquisitions, restructuring, counseling, financial advisers, etc., and in recent years the trend is that the traditional business is gradually stabilized, and its share of the income of the securities company tends to be smaller than the proportion of the emerging business is gradually increasing. At present, the brokerage business is the core business of securities companies, but also the most important source of income, therefore, the current liabilities of securities companies usually accounted for more than 90% of the total liabilities, which is in sharp contrast to the traditional manufacturing industry. Due to the characteristics of its own industry, the liability structure of securities companies in the current liabilities accounted for a large proportion of current liabilities, and current liabilities are mainly caused by the company's brokerage business and investment banking business, securities companies should vigorously develop the brokerage business and investment banking business, optimize the capital structure, enhance the company's performance. (A) deepen the brokerage business

Compared with the mature market, the degree of specialization of China's securities companies is still very low. In the United States, Merrill Lynch around the investment management, investment consulting to carry out asset management business; Lehman Brothers focus on the secondary market proprietary business; Goldman Sachs focus on the primary market underwriting business; Charles Webb to provide cheap trading-based brokerage business. China's securities companies in more than a decade of development in the process of business scope continues to expand, but it can not be denied that the vast majority of brokerage firms are still the largest source of profit is the brokerage business.

On April 23, 2008, the State Council promulgated the "Regulations on the Supervision and Administration of Securities Companies" and "Regulations on the Disposal of Risks of Securities Companies", and the full-scale launch of the securities financing business is just around the corner, which will change the brokerage business model, and generate a two-way profit model for the brokerage business as well as the brokerage business and the integration of other businesses put forward by the brokerage business higher requirements. Being able to obtain the pilot qualification of the brokerage firms will become the biggest gainers, this gain not only comes from the profits generated by the financing and securities business, but also includes a substantial increase in the share of the traditional brokerage business. There are only two ways out for brokerage firms without pilot status: professional brokerage firms and integrated brokerage firms. To build up their own research strength and risk management capability, and to strive for the early launch of financing and securities financing business will be the way out for most domestic securities companies, while borrowing the financing and securities financing channel of the pilot brokerage firms may be the helpless move for the non-pilot-eligible brokerage firms to protect their existing customer resources. In the process of borrowing channel, how to improve the quality of research and consulting of non-qualified brokerage firms will be the focus of the period of service. In addition, optimize the layout of the business department, strengthen the network construction, enhance the efficiency of the channel, expand the channel function is also a brokerage firm to improve the existing level of income powerful measures.

(B) expand the investment banking business

Foreign securities companies to enter the market in China, the traditional underwriting business of the domestic securities companies also formed a huge impact, especially the marketization of securities issuance, the success of the issuance of a large extent will depend on the securities company's experience in underwriting, financial strength, and research power. Increase the reserve for securities underwriting; establish a core customer service system to improve the quality of underwriting services; establish an effective internal division of labor mechanism; and continue to pursue the innovative design of stock issuance methods. For example, to enhance the efforts of the large central bond projects, fully mobilize the enthusiasm of the business department, improve the company's network of securities sales capacity, strengthen the municipal bonds, convertible bonds, asset-backed bonds, foreign currency bonds, policy financial bonds and other innovative varieties of research and development, and actively look for potential opportunities for the underwriting business of the second board market, and so on.

(C) to broaden the financing channels

At present, China's securities companies based on the solid development of traditional business, the development of these businesses require a lot of capital investment. From the agency business, now open a business department needs to invest at least 6 million yuan of capital, a few luxury decoration, advanced equipment business department needs to invest more than 10 million yuan, in addition to the business department must have a certain amount of daily working capital and liquidation funds; from the investment banking business, securities companies engaged in primary market underwriting, mergers and acquisitions and other businesses, most of the project operation process needs to be provided to the project The parties to provide short-term financing that "bridge loan" in order to make the project successfully implemented. Securities companies to develop new businesses, the formation of the characteristics of the operation requires a large amount of capital investment, and therefore should vigorously broaden the financing channels.

1. Improve the existing financing channels

At present, China's securities companies, in addition to capital increase or public offering of shares to increase capital, there are three kinds of legal financing channels: one is to enter the interbank lending market for short-term borrowing and lending; the second is to carry out in the interbank lending market or the Shanghai and Shenzhen Stock Exchange market for the repurchase of treasury bonds; the third is to carry out the pledge of stock with the self-employed securities. Loans. These three channels to a certain extent can make up for the lack of securities company's capital position, to solve the problem of temporary capital turnover, but can not meet the securities company in the medium and long term development of capital needs.

In the mature capital market, securities companies through the above channels to finance the proportion of its total liabilities generally accounted for more than 30% -40%; and in China, the above channels to finance the amount of funds is still very limited, the reason is that: the securities company to enter the interbank lending market conditions are high, lending and borrowing amount and borrowing period are subject to strict limitations; stock pledges to finance the procedures are more cumbersome; the cost of financing is relatively high, the maximum period of time, but also to meet the need for medium and long-term development of securities companies. High, the longest period is only 6 months, so these three financing channels have not yet given full play to their due role. With the strengthening of the capital strength of China's securities companies and the continuous improvement of the internal control mechanism, should be appropriate to relax the strict control of the securities company lending and repurchase business, relax the pledge financing period, allowing more securities companies to use these three channels to finance short-term funds.

In addition, drawing on foreign securities companies generally have a revolving credit agreement with the bank's practice, we can consider allowing China's commercial banks to provide underwriting securities with good business performance, high creditworthiness of the brokerage firms need working capital loans and a small amount of long-term loans, but also consider the brokerage firms through the establishment of the fund, the issuance of commercial paper and other to obtain funds. Note financing has the advantages of flexible means of financing, low cost, large-scale financing, and as a credit instrument in the money market, it is also conducive to the flexible operation of monetary policy, and is conducive to the active money market, communication between the money market and the capital market.

2. Issuance of medium- and long-term financial bonds

Liability financing should be based on medium- and long-term debt capital, and at present, China's short-term and medium-term liabilities in the debt capital structure of the securities companies accounted for more than 90% of the proportion of the majority of the securities company's total long-term liabilities of zero, which can bring greater interest in the debt financing of medium- and long-term liabilities. Large foreign securities companies issued long-term bonds are generally larger in size, in the comprehensive capital accounted for a larger proportion of the general more than 70%, while China's securities companies so far only a few through the issuance of bonds to enrich the medium and long-term sources of funds.

The relevant departments should strengthen the qualification review of the bond issuance subject, gradually relax the bond issuance program size control, promote the market according to the principle of efficiency, bond financing as a basic means of financing securities companies to cultivate in the future. On the one hand, it can make those securities companies with good asset quality and large business scale raise medium and long-term funds; on the other hand, it can also promote the improvement and enhancement of the operation and management of the securities companies through the bond credit assessment system. Therefore, with the expansion of the scale of China's securities companies, the issuance of financial bonds will become an effective way for securities companies to integrate funds.

In short, to open up multiple effective financing channels for securities companies to grow in size, which helps securities companies to improve the financing structure, improve the overall competitiveness and risk-resistant ability.