Strong Signal From The 2020 Annual Report Of Securities Companies: The Existence Of Brokerage Business And Investment Banking In An All-Round Way

The word "inner volume" is not too much to be used in the traditional investment banking and brokerage business of securities companies.

In 2020, all the annual reports of listed securities companies have been released. After the group tour, if you want to say what impresses people most, it is the classification of the main business of securities companies. Traditional businesses such as investment banking and brokerage business have been incorporated into the new business name, and the external disclosure of such business performance has changed from open and transparent to fuzzy and invisible. In 2020, the frequent low-cost underwriting of investment banks of securities companies and the extremely low commission charges of brokerage business for a long time show that securities companies are engaged in cruel "Involution" competition in order to compete for limited business resources.

The brokerage business is involved in blood loss

Inner volume, as the Internet buzzword of 2020, is used to describe the "involuntary" competition in the workplace. This adjective, used in the investment banking and brokerage business of securities companies, began to become appropriate.

In recent years, with the increasing homogenization competition between securities investment bank and brokerage business, these two traditional businesses seem to gradually become the old production capacity of securities companies that are "more and more unprofitable". As a result of this change, the investment banking business and brokerage business of securities companies began to disappear from the main business of the annual report and were merged into the new business name.

In particular, brokerage business has become the recognized old capacity of the securities industry, and it is very common for brokerage business to be merged into other items of financial statements.

In recent years, in the annual reports of many securities companies, brokerage business has been incorporated into wealth management business or personal financial business. Huatai Securities, Haitong Securities, Guotai Junan, CITIC construction investment and other top securities companies have made changes in the financial report compilation. Interestingly, only CITIC Securities, the first brother of the securities firm, still uses the classification of "brokerage business".

The involution of brokerage business is inseparable from its "class solidification". Since 2015, the top nine brokers in the brokerage industry have remained unchanged: CITIC Securities, Guotai Junan, China Galaxy, China Merchants Securities, Huatai Securities, Guoxin Securities, Guangfa Securities, Shenwan Hongyuan and Haitong Securities. It's just that the specific ranking has changed in these nine securities companies.

Although the pattern of the industry has been solidified, the brokers in the middle and the tail still want to gain a small number of new users. As a result, small and medium-sized securities companies that want to grow rely on low commission to attract customers, which has become a tacit rule.

"To small securities companies to open an account, a little bit of capital, the basic rate can be very low. Especially in 2020, the market is hot, which is a good time to bring in new products. With a capital of 200000 yuan, you can open an account with a rate in case of small securities companies. Big securities companies have no power. With such a low transaction rate, big securities companies may only talk to big investors one-on-one. " Some investors said.

At present, the transaction cost of securities companies in the exchange is "10000.9" service charge, and the "one-off" commission charged to customers is actually equivalent to loss making business, which is "internal to blood loss".

But, of course, the securities companies will not make a loss in trading. The customers with small profits are just to be kept in captivity and charged in the form of other businesses. Just as the brokerage business is commonly known as "wealth management business" after its name has been changed, it aims at a financial service of the whole life cycle of a user from young to old, and securities companies want to win it.

Oriental Fortune, which is familiar with the Internet, is more direct. Dongfang fortune once launched time limited activities in August 2020. As long as users open two financing services, the transaction rate can be reduced to 11.5 million. On the one hand, ordinary customers are turned into potential clients of the two financial services through limited time activities; on the other hand, Dongfang fortune has continuously issued convertible bonds and raised funds in recent two years, so as to better provide financial support for the two financial institutions.

"Liangrong business is the" most profitable "business of securities companies at present, and it is also the focus of Dongfang fortune in the eyes of institutional investors last year." Investment and research personnel of an institution said that "loss making" brokerage business can always earn back in other aspects.

However, some securities practitioners said that by reducing the Commission activities to attract customers, this may be suspected of violations“ How much is the rate of securities companies to customers? This is not public. As long as the securities companies want you as a customer, they will talk to them in some ways. But it depends on how to publicize it to avoid violating the rules. " The brokerage practitioners said.

Low price underwriting promotes investment banking business

In recent years, the investment banking business has been incorporated into the institutional business by several securities companies.

For example, since the annual report of 2017, Huatai Securities has not included separate items of traditional investment banking business in its main business. Instead, investment banking, research institute Commission, ficc, Pb and other businesses are integrated into the name of institutional service business, while the traditional business of brokerage, financing and financial products sales on behalf of C end is included in the name of wealth management business.

Guotai Junan adopted a similar division method with Huatai Securities earlier, except that "institutional service business" corresponds to "institutional finance" and "wealth management business" corresponds to "personal finance".

Societe Generale Securities also began to adjust the classification of financial statements in 2019, and investment banking business was also classified under the name of institutional services. However, the securities and futures brokerage business previously divided under the wealth management business was re independent when the 2019 annual report was adjusted.

However, such changes are still rare in the financial statements of securities companies. In the main business classification of most securities companies, the investment banking business is still a separate part.

Although the name still has "independence", after the brokerage business has completed the low price battle, the investment banking business has also begun to fight for low price.

In 2020, the "floor price" underwriting of securities companies is highly concerned by the market, and at the same time, it has received regulatory interviews. As a matter of fact, low price underwriting has been happening since 2018.

In the eyes of the outside world and regulators, "floor price" underwriting is a vicious competition. As a result, securities companies involved in low price underwriting received regulatory warnings, interviews, orders to correct, and even some institutions' related business was suspended. The behavior of partial low price underwriting is defined as "chaos" and "behavior causing adverse market impact".

But some investment bankers believe that this is just the struggle of securities companies“ If you take part in the maintenance of some large customer relationships with low-cost underwriting, it may be beneficial for other businesses in the future. " The investment bank personage said that with a sense of crisis, securities companies have changed the investment banking system to lay a good foundation for low-cost horse enclosure.

For example, China CITIC has changed the former team compensation model of "more work, more pay, better work and better pay" of investment banks, but the mode of taking a certain share of the overall profits of investment banking business. This enables it to take the projects in the market at a very low price and realize the accumulation of company resources.

Although optimistic researchers say that with the promotion of China's capital market reform and the spread of the registration system, more and more listed companies will bring a larger incremental market for investment banks. But listing becomes easier, which means it is difficult for securities companies to get high premium from listed companies. This can be seen from the gross margin of the investment banking business of securities companies.

In 2020, the reform and heat of the market will bring gratifying income to the investment banks of securities companies, and the gross profit rate of investment banking business of listed securities companies will basically increase. However, in fact, the great prosperity of the market did not make the investment banking gross profit margin of securities companies get a greater improvement, and the gross profit rate of investment banking business of many head brokers did not exceed the level in 2015.