New measures to support securities

China's securities regulator said at an industry gathering over the weekend that it will relax market access, grant new business licenses and further widen the financing channels for securities brokerage firms to boost innovation in the sector and strengthen its support for the economy.

The regulator will encourage private capital to set up securities firms, allow non-securities financial institutions to hold stakes in securities agents, and grant fund companies licenses to run stock brokerages and vice versa, said Yao Gang, vice chairman of the China Securities Regulatory Commission (CSRC), at an annual forum for brokerage firms on Friday.

Yao also said securities companies will be encouraged to expand overseas.

It is also hoped that the regulator will loosen rules to allow securities firms to engage in bond issuance as well as borrowing and lending in the interbank market, in order to increase their liquidity, Wang Dongming, chairman of CITIC securities, was quoted as saying at the forum by news portal caixin.com.

The regulator should also loosen controls on securities firms' proprietary trading, allowing them to invest in non-listed firms and bonds, according to Wang.

Providing financial consultancy services and financing for mergers and acquisitions will be a new trend as an increasing number of domestic firms are investing overseas, Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times on Sunday.

The rising number of rich people in China also offers opportunities in areas such as wealth management for securities firms, Dong said.

Another area for potential innovation could be channeling private capital through Internet financing to support cash-starved firms that find it hard to get bank loans, he noted.

For a long time, securities firms have mainly relied on revenues from IPO underwriting, commission fees for stock brokerage and proprietary trading.

Currently, stock brokerage firms are the fourth-largest part of the financial sector in terms of assets managed, after banks, trust firms and insurance companies.

Securities firms had combined revenue of 159.2 billion yuan ($25.9 billion) in 2013, less than the revenue of 164.4 billion yuan made by Bank of Communications alone, the fifth-largest lender by assets in China.

By 2020, brokerage firms will attain an average 20-30 percent annual growth in managed assets and will be a core component of the domestic financial system, according to a blueprint released on Friday by the Securities Association of China.

More detailed regulations are expected to be rolled out in the next couple of years, which will be in line with guidelines recently issued by the State Council to boost the capital market, China Business Journal reported Saturday.

The State Council pledged on May 9 to push forward an array of capital market reforms in order to create a more transparent, multi-layered market with widened funding channels and more efficient allocation of resources.