The development of domestic Internet technology could see China fight off stiff competition from foreign rivals, it has been claimed.
Chinese securities regulators believe development of the industry is essential following China's entry into the World Trade Organization (WTO).
"The Internet will bring us golden opportunities to catch up with those advanced countries in the development of the securities market with the most up-to-date technologies,'' said Zhou Xiaochuan, chairman of China Securities Regulatory Commission (CSRC).
"Online trading volumes and accounts rose significantly compared with those last year and that is a sign of a breakthrough in securities dealings on the Internet,'' Zhou said day at a China E-Securities Seminar.
According to the latest statistics from CSRC, the volume of online trading reached 200 billion yuan (US$24 billion) in the first half of this year. More than 2.7 million investors have opened trading accounts in the same period.
The trading volume accounted for more than 4 percent of the total transactions. Five percent is usually believed to be a break point for online trading.
CSRC, the watchdog of China's securities markets, has approved 33 brokers to operate on the Internet.
IT companies, including financial Internet businesses, will be able to apply for online securities brokerage licences, which were prohibited previously, according to Zhou.
"Some Internet businesses are considering handing in their applications and they will be approved to run securities brokerage on the Internet,'' Zhou said.
Sharpening the cutting edges of domestic brokers against forthcoming competition from foreign giants after China's entry into the WTO is another major consideration for CSRC in the promotion of online trading.
"If Chinese brokers do not change their thinking and adapt to the Internet age, they will have some troubles in coping with the challenges from WTO,'' warned Xu Yaping, director of the Information Centre with CSRC, which is in charge of the promotion of e-commerce.
Chinese brokers are also optimistic about the future of online trading and some are even reaping the benefits from their investment in online trading.
The Nanjing-based Huatai Securities Co Ltd, the biggest broker in terms of online trading, witnessed a 100 per cent online trading growth year-on-year.
"Thanks to online trading, we are already the ninth largest brokerin China in terms of volume in spite of a 30 percent drop of transactions in the whole market,'' said Wang Yijun, vice-president of Huatai.
He predicted that online transaction would account for 7 percent of the total trading of Chinese stock markets this year -- and 15 percent in 2002.
Analysts from the International Data Corporation also said online trading would contribute about 22 percent of the total transactions in 2005 and about 20 million Chinese investors will conduct deals on the Internet.
(China Daily 07/31/2001)
