While overseas securities companies are looking for opportunities to set up business in China, domestic brokerages are brewing plans to get involved in the international scene.
Chinese authorities are drafting relevant regulations to facilitate the efforts, said Ma Qingquan, secretary-general of the Securities Association of China (SAC).
A number of domestic securities houses are considering opening branches abroad, he said.
Some would also be allowed to conduct asset management to expand their business scope. Rules to specify how the sector should operate are due out soon.
The expansion and development of the investment banking business will help the securities industry better prepare for impending competition from foreign counterparts.
Ma said a number of overseas investment banks and securities companies are likely to acquire licences to set up securities or fund management joint ventures in China this year. Some will be allowed to invest in domestic A-share market, he said.
"There will be a few pilot firms first," said Ma.
Though the domestic securities industry will face stricter supervision from regulators to avoid irregularities, that does not mean the sector will not expand or innovate, Ma said.
In fact, securities firms, after a three-year adjustment, have greatly improved their internal controls and reduced irregularities, he said.
This year, the SAC will further promote self-discipline in the operations in the secondary market.
To that end, SAC will issue detailed guidance.
"We are preparing an investor interest protection center, which will be authorized to raise civil lawsuits against listed companies and other institutions when there is infringement of investors' rights," Ma said.
The China Securities Regulatory Commission and the Supreme People's Court are still coordinating the matter, he said.
Meanwhile, the association is also working out a more flexible scheme of brokering fees to lower prices in that sector.
Ma predicted that a reduction of commission fees is unavoidable as online stock trading develops and competition heightens, but the reform should be conducted in an orderly way to avoid a harmful price war.
By the end of last year, China had 101 securities companies with total assets of 575.3 billion yuan (US$69 billion) and net capital of 23.6 billion yuan (US$2.9 billion). Despite that modest size, these companies managed to realize a profit of 24 billion yuan (US$2.9 billion) in 2000.
(China Daily 02/26/2001）
