More than half of mainland brokerages downgraded by CSRC

Firms now likely to receive increased inspection and examination by regulators over the next year

PUBLISHED : Friday, 15 July, 2016, 10:38pm
UPDATED : Friday, 15 July, 2016, 10:38pm

The China Securities Regulatory Commission (CSRC), China’s top securities regulator, has downgraded more than half of the mainland’s brokerages in an annual review, the authority announced on Friday in Beijing.

“The rating reflects a company’s general condition in compliance management and risk control. It is not an assessment of its assets and credibility,” said Deng Ge, a spokesman for the CSRC.

One Beijing based brokerage analyst who asked not to be named, said that companies ranked lower by the CSRC will receive more intensive inspection and examination by regulators during operations in the next year.

Also, they will meet tougher challenges when applying to set up new businesses

The rating reflects a company’s general condition in compliance management and risk control. It is not an assessment of its assets and credibility
Deng Ge, CSRC spokesman

“The brokerage companies ranked lower in this list will also have to submit a higher proportion of their revenue into the investors’ protection fund, looked after by specialised company under the CSRC,” he added.

All brokerages fall into five categories from A to E, ranking from high to low.

Companies in the A-C categories imply a normal operation, and they then put into smaller sub-rankings, such as AAA, AA, A, from high to low.

No companies were put under the D and E categories this year, indicating alarming levels of risk.

Securities companies including CITIC Securities, Haitong Securities, Industrial Securities, and Guosen Securities, GF Securities and Huatai Securities were downgraded to BBB from AA.

Founder Securities was downgraded from A to C.

All seven of the above companies are under investigation for breaching laws and regulations, including margin financing, and initial public offering sponsoring, the CSRC said.

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