Opinion leaders | Dai Zhifeng, Jiang Qiao
Key investment points
Core point: The CSRC issued the Regulations on the Administration of Securities Trading Expenses of Publicly Offered Securities Investment Funds, which will be implemented from July 1, 2024. On the whole, there is little difference between the content of the new regulations and the previous opinion draft, and the commission rate of public offering transactions may drop to about 4.5 million (about 2.5 million for passive stocks and about 0.5 million for active stocks). Static calculation shows that the public placement sub warehouse commission decreases by 38%, which has little impact on the overall revenue of securities firms (0.6% - 1.5%); However, the competition and differentiation of research sub warehouse stock are intensified: it is superior to the securities companies with strong research and comprehensive strength.
Core contents of the new regulation on public offering commission:
1. The commission rate of public offering transactions may be reduced to about 4.5 million, including about 2.5 million for passive shares and about 4.9 million for other types. 1) The commission rate requirements are consistent with the previous comments. That is, the trading commission rate of index funds shall not exceed the average market rate, and the trading commission rate of other types of funds shall not exceed twice the average market rate. 2) Calculation of commission rate reduction. In 23 years, the total amount of public placement sub warehouse commissions was 16.84 billion yuan, and the average commission rate was 7.3 million yuan. According to the static calculation, the public placement sub warehouse commissions will decrease by 38%, saving investors 3.2 billion yuan and 6.4 billion yuan in costs in 24 and 25 years respectively; It is estimated that the commission rate will drop to about 4.5 million, including about 2.5 million for passive stock and about 4.9 million for other types.
2. The commission paid to a single broker shall not exceed 15% of the total commission, and the 30% rule is still applied to securities settlement funds, newly established funds in the first year, and equity scale of no more than 1 billion yuan. However, compared with the opinion draft, this new addition clearly stated that "it is not allowed to avoid the 15% concentration limit by transferring stock products to securities".
3. It is strictly prohibited to exchange interests, link sales and transfer payment by a third party. Transaction commission cannot be linked to the fund sales and retention scale, and cannot be transferred to a third party. However, under the securities settlement mode, research service fees can be paid to a third party broker.
Impact and prospect on the income, pattern and business model of securities firms:
1. The decline of commission has a differentiated impact on the income of securities firms, but the overall impact is limited. It is estimated that the decline of commission will drag down the revenue of securities companies by 0.6% - 1.5%; The commission decline of some research business featured securities companies accounted for a relatively high proportion of revenue.
2. Pattern influence. Prior to that, small and medium-sized securities companies have been entering the market, and the competition has become increasingly fierce. The 23 year warehouse separation commission CR5 CR10 CR20 was 25.4% 42.2% 65.9%, and the CR5 CR10 CR20 decreased by 1.7 pct 3.7 pct 7.9 pct in the past three years. It is expected that the competition will become more intense after the new regulations, and the securities companies with strong comprehensive strength in research and institutional business will be relatively dominant. The reasons include: 1) The cake becomes smaller, Stock competition intensifies; 2) The proportion of commission distribution to a single securities firm is reduced from 30% to 15% (except for several cases), excessive commission or diversion to the industry. 3) It is strictly prohibited to exchange interests, link sales and transfer payments from third parties, The research hopes to return to the essence and benefit from strong research strength; In addition, the securities settlement mode tests the comprehensive strength of trading, sales, custody, etc.
3. Business model impact and outlook. 1) Research business of securities firms: return to the source and expand income. It is prohibited to use commission for channel commission, and the proportion or relative increase of research commission in warehouse division commission. 2) The channel end of securities companies may accelerate the transformation to the buyer mode, from heavy sales to heavy retention. It is expected that the securities settlement business will expand, but the transfer of stock products to securities settlement will be blocked.
Risk warning: the economy declines more than expected; The policy promotion is not as expected; The equity market fluctuated significantly.
Text analysis
1、 Main contents of the new regulation on public offering commission and its comparison with the draft for comments
On April 19, 2024, the CSRC formulated and issued the Regulations on the Management of Securities Trading Expenses of Publicly Offered Securities Investment Funds, which will be officially implemented from July 1, 2024.
1. The commission rate of public offering transactions may be reduced to about 4.5 million, including about 2.5 million for passive shares and about 4.9 million for other types. According to China Fund News, after the promulgation and implementation of the Regulations, the total annual stock trading commission of public funds will decrease by 38% based on static data. In 2024 and 2025, the cost of investors will be saved by 3.2 billion yuan and 6.4 billion yuan, respectively. In two years, the cost of investors will be saved by nearly 10 billion yuan accumulatively. According to wind data, in 2023, the total amount of public offering sub warehouse commissions will be 16.84 billion yuan, and the average commission rate will be 17.3 million yuan. Based on the above data, it is estimated that the commission rate of public offering stock transactions will fall to about 4.5 million yuan (since the new rules will be implemented on July 1, 2024, that is, half a year in 2024, so the results under the static calculation based on the whole year of 2025, the static assumption is that the transaction amount and product structure will remain unchanged) ； At the same time, according to the relevant data of passive stock and other types of products, it is estimated that the commission rate of passive stock has dropped to about 2.5 million, and that of other types has dropped to about 4.9 million.
The specific provisions of the document are: specify the level of securities trading commission rate. 1) Reasonably reduce the fund stock trading commission rate. Passive stock fund products shall not pay research services, liquidity services and other fees through securities trading commissions, and the stock trading commission rate shall not exceed the average stock trading commission rate in the market in principle; For other types of fund products that pay research service fees through securities trading commissions, in principle, the stock trading commission rate should not exceed twice the average stock trading commission rate in the market. 2) Clarify the release mechanism of average commission rate level. The Securities Industry Association will regularly measure and calculate according to the change of the trade commission rate of the industry, and the industry institutions will adjust accordingly within the specified period.
Comparison with the Draft for Comments: On the basis of clarifying that the transaction commission of passive equity funds shall not pay other fees such as research services and liquidity services, this new "emphasizes that other types of funds shall not pay other fees other than research services through transaction commissions" 。
2. The commission paid to a single broker shall not exceed 15% of the total commission, and the 30% rule is still applied to securities settlement funds, newly established funds in the first year, and equity scale of no more than 1 billion yuan.
The specific provisions of the document are: lower the upper limit of the distribution ratio of securities trading commission. 1) For managers with equity fund management scale less than 1 billion yuan, maintain the upper limit of commission distribution ratio of 30%; For managers of equity funds with a management scale of more than 1 billion yuan, the upper limit of commission distribution ratio will be lowered from 30% to 15%. 2) Clarify the requirements for the distribution ratio of trading commission under the coexistence of the securities trading mode and the rental trading unit mode. Fund managers whose total management scale of equity funds and hybrid funds at the end of the previous year has not reached 1 billion yuan are not subject to the proportion limit in the preceding paragraph, but the total annual trading commission of securities trading through a securities company shall not exceed 30% of the total trading commission of all fund securities in the current year. Article 5 does not apply to the funds managed by the fund manager that adopt the securities trading mode. If the fund manager adds the mode of renting trading units to conduct securities trading, the commission ratio of securities trading of corresponding fund products shall meet the provisions of Article 5 from the second year. The fund manager shall not evade the provisions of Article 5 by changing the securities trading mode of the surviving fund.
Comparison with the Draft for Comments: With the securities firm settlement mode, the maximum commission paid by a single securities firm of 30% can still be used, But this addition "The fund manager shall not avoid it by converting the securities trading mode of the surviving fund".
3. Transaction commission cannot be linked to the fund sales and retention scale, and cannot be transferred to a third party. However, under the securities settlement mode, research service fees can be paid to a third party broker.
The specific provisions of the document are to strengthen the internal system requirements of fund managers and securities companies. 1) Require the fund manager to establish and improve The selection of securities companies, agreement signing, service evaluation, trading commission distribution and other management systems are strictly prohibited to link the selection of securities companies, leasing of trading units, trading commission distribution, etc. with the fund sales scale and retention scale, It is strictly prohibited to promise the trading volume and commission of fund securities to securities companies in any form or use trading commissions to exchange interests with securities companies, and it is strictly prohibited to use trading commissions to transfer payment fees to third parties, including but not limited to fees incurred from the use of external expert consultation, financial terminals, research platforms, databases, etc. The funds managed by the fund manager that adopt the trading mode of securities dealers, except for those that use trading commissions to pay research service fees to third-party securities companies. 2) Strengthen the research capacity building of securities companies, Optimize the assessment and incentive mechanism of fund sales business of securities companies, require securities companies to establish a mechanism to effectively prevent conflicts of interest between fund sales and securities trading, research services and other businesses, improve the internal assessment mechanism of fund sales business, and prohibit the direct or indirect use of fund securities trading volume and trading commission as sales departments, branches Assessment indicators of fund sales personnel. 3) Compacting the responsibilities of the Fund Custodian, Strengthen external supervision and restriction.
Comparison with the Draft for Comments: 1) New requirements "If the fund manager entrusts a money brokerage company to provide brokerage services for the fund, the relevant service fees shall not be disbursed from the fund assets." 2) The transaction commission shall still not be transferred to a third party, But new "The funds managed by the fund manager that adopt the trading mode of securities dealers, except for those that use trading commissions to pay research service fees to third-party securities companies."
4. Strengthen the main responsibility, and clarify the disclosure content and requirements of transaction commission information at the fund manager level.
The specific provisions of the document are: 1) The general manager, compliance principal and other senior managers of the fund manager shall conscientiously perform their compliance management responsibilities, and the compliance principal shall conduct compliance review on the selection of securities companies, agreement signing, service evaluation, trading commission distribution, investment operation management, and the conversion of trading mode of the deposit fund involved in the securities trading of the Company. 2） The Fund Manager shall, before March 31 of each year, publicly disclose on the official website the criteria and procedures for selecting securities companies, the relationship with the securities companies providing services, the rate of stock trading commission, the annual summary and distribution details of trading volume, the annual summary expenditure and distribution details of trading commission and other information.
Comparison with the Draft for Comments: New requirements for the performance of the general manager, compliance director and other senior managers of the fund manager 。
2、 Impact on the income, pattern and business model of securities companies and its prospects
1. Revenue impact. 1) The scale of sub warehouse commissions declined. According to China Fund News and the above calculation results, based on static data, the total annual stock trading commissions of public funds will decrease by 38%, saving investors 3.2 billion yuan and 6.4 billion yuan in 2024 and 2025, respectively. For securities companies, the commission rate has dropped to about RMB 4-5 million. Without considering the change of transaction volume, it means that the commission income from separate warehouses has declined significantly. 2) The decline of commission has a differentiated impact on the income of securities firms, but the overall impact is limited. Assuming that the public offering trading commission declines by 38% in the static measurement, the impact on the revenue of securities companies is relatively small, and the revenue drag of most comprehensive securities companies is only about 0.6% - 1.5%. The commission decline of some research business featured securities companies accounted for a relatively high proportion of revenue.
2. Pattern influence. We estimate that the warehouse separation commission CR5 CR10 CR20 in 2023 will be 25.4% 42.2% 65.9% respectively. In general, the industry concentration has declined slightly in recent years. In recent three years, the CR5 CR10 CR20 has declined by 1.7 pct 3.7 pct 7.9 pct respectively. Previously, the seller's research continued to involve small and medium-sized securities firms, and the competition has become increasingly fierce. We expect that after the new rules, the competition in the sub warehouse commission will become more intense, but the large bond chamber with strong comprehensive strength in research and institutional business will be relatively dominant. The reasons include: 1) the commission rate is down, The total amount of sub warehouse commissions in the whole market decreased, the cake became smaller, and the stock competition intensified; 2) The proportion of commission distribution to a single securities firm is reduced from 30% to 15% (Except for a few cases), the managers of equity funds with a management scale of more than 1 billion yuan should distribute commissions to at least seven securities companies, and the excessive commissions or diversion to the industry will help to delay the process of studying business and accelerating the clearing process in the process of industry scale decline to a certain extent. 3) It is strictly prohibited to exchange interests, link sales and transfer payments from third parties, Strictly limit the cut between trading commission and fund sales behavior, research commission is expected to return to essence, and securities companies with strong research strength will benefit more; In addition, the cooperative issuance of securities settlement funds is more related to the research, trading, sales, custody and other service capabilities of securities companies.
3. Business model impact and outlook. 1) Research business of securities firms: return to the source and expand income. It is prohibited to use commission for channel commission return. The proportion of research commission in the sub warehouse commission is higher or higher. The increase of research commission proportion may offset the decrease of the total commission to a large extent, and may have a relatively small impact on the research commission plate. In the future, it is expected that the research business will continue to improve its comprehensive capabilities through strengthening in-depth research, expanding revenue channels, strengthening internal collaboration and other initiatives. 2) The channel end of securities companies may accelerate the transformation to the buyer mode, from heavy sales to heavy retention, and the fund investment adviser and bond settlement mode are expected to develop faster. First, the development of securities settlement fund, but the transfer of stock products to securities settlement mode will be blocked. As the 30% single securities dealer distribution ceiling is still applicable under the securities dealer settlement mode, it is expected that securities dealers will still increase their efforts to develop securities settlement business. At the same time, this new regulation stipulates that "fund managers shall not avoid by converting the securities trading mode of the surviving fund", so it is expected that the transfer and settlement mode of stock products will be blocked. Second, the channel end of securities companies needs to accelerate the transformation from seller sales to buyer investment advisory mode, On the basis of stabilizing equity and fixed income products, continue to develop ETF, fund investment advisory business, etc., and expand the scale of product retention.
Risk warning:
The economy declined more than expected. Macroeconomy is affected by industrial changes, international situation and other changes. Economic changes affect corporate profits and market preferences, and affect the sector.
The policy advancement was not as expected. The development of various businesses of securities firms is related to capital market policies, which have an impact on the development trend of the securities industry.
The equity market fluctuated significantly. The securities business is highly related to the market performance, and the equity market fluctuations will have an impact on the statements.
(The author of this article introduces: Chief of the banking industry of Zhongtai Securities, head of the financial team, and a special researcher of the National Finance and Development Laboratory.)
