CSRC pushes for bank loans to brokerages

The China Securities Regulatory Commission (CSRC) has proposed allowing brokerages to raise loans from commercial banks - a move aimed at helping them expand their services to tap the rising affluence of mainlanders.

In a draft guideline on measures to support the growth of the nation's 100-odd brokerages seen by the South China Morning Post, the CSRC says brokers should be given free rein to innovate and meet the increasing demand for financial services.

The proposal represents another step in the campaign by CSRC chairman Guo Shuqing to reform the mainland's equity market with a view to paving the way for the emergence of China's own Morgan Stanley or Goldman Sachs.

'It is advisable to widen securities firms' financing channels,' the document said. 'Securities firms should be allowed to borrow money from banks as their ordinary clients.'

Presently, mainland brokerages can borrow money on the interbank market or use shares they own for proprietary trading as collateral to secure bank loans.

The overall loan amount to brokerages is small because the mainland's securities firms are largely dependent on brokerage fees that normally account for 60 per cent of their total financing needs, and as a result they do not borrow heavily.

Now Guo hopes to enable brokerages to quicken their expansion and roll out more new product launches during his tenure. He has pledged to further liberalise the sector and give it strong policy support.