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on september 20, the china securities regulatory commission issued the revised "regulations on the calculation standards of risk control indicators for securities companies" (hereinafter referred to as the "regulations"), further giving play to the "baton" role of risk control indicators. the calculation standards for risk control indicators for securities companies investing in stocks and conducting market making and other businesses have been improved, and the risk control indicators of high-quality securities companies have been appropriately optimized, that is, the risk capital reserve adjustment coefficient and the conversion coefficient of total on- and off-balance sheet assets of securities companies that have been ranked at the top of the classification evaluation for three consecutive years have been appropriately adjusted, and the available stable funds have been enriched in a differentiated manner.

industry insiders pointed out that this move is intended to support high-quality securities companies to moderately expand their capital space, and is expected to release nearly 100 billion yuan of funds, promote the effective improvement of capital utilization efficiency, and increase services to the real economy and residents' wealth management.

guiding securities firms to play a better role

securities companies' follow-up investment in the science and technology innovation board, market-making transactions, system construction, and compliance and risk control investments all require consumption of net capital. in order to promote the functions of securities companies and better serve the construction of a modern capital market with chinese characteristics, this revision optimizes and improves the calculation standards for risk control indicators for securities companies' investment in stocks and market-making businesses, further guiding securities companies to exert their strength in investment, financing, and trading, give full play to their role in long-term value investment, serving the financing of the real economy, and serving the wealth management of residents, and provide high-quality financial services for economic and social development.

specifically, the various risk control indicators maintained the original basic framework, and the regulatory standards and early warning standards for the four core risk control indicators, risk coverage ratio, capital leverage ratio, liquidity coverage ratio, and net stable funding ratio, remained unchanged. the main change was that the subdivision items and calculation standards of the numerator and denominator of the risk control indicators were partially adjusted according to the needs of industry development.

zheng jisha, chief analyst of non-bank financials at china merchants securities, believes that the "regulations" are more "refined", which will help guide securities companies to consolidate their risk control foundations, optimize the allocation of financial resources, and provide higher-quality financial services.

"this will broaden the capital space for high-quality securities firms and improve capital efficiency, while promoting the high-quality development of market making, asset management, public reits and other businesses on the basis of controllable risks." huatai securities analyst shen juan said that it will help guide securities firms to make comprehensive efforts on the investment, financing and trading ends, and give full play to the role of active capital markets.

helping high-quality securities firms grow bigger and stronger

this revision expands the capital space for high-quality securities companies by relaxing the risk capital reserve adjustment coefficient and the conversion coefficient of total on- and off-balance sheet assets for high-rated quality securities firms.

specifically, this revision supports compliant and stable high-quality securities companies to moderately expand their capital space and better provide comprehensive financial services for the real economy. it will appropriately optimize the risk control indicators of high-quality securities companies, appropriately adjust the risk capital reserve adjustment coefficient and the conversion coefficient of total on- and off-balance sheet assets of securities companies that have ranked at the top in the classification evaluation for three consecutive years, differentiate and enrich available stable funds, and support high-quality securities companies to moderately expand their capital space.

in recent years, the number of securities companies of various categories has remained stable, with the number of class a, class b, and class c companies accounting for 50%, 40%, and 10% respectively, and the number of aa-level companies remaining at around 14. from the perspective of the regulations, the optimization of relevant indicators will help high-quality securities companies, especially those with the highest classification rating results, to break through the current bottlenecks of risk control indicators such as net stable funding rate and capital leverage ratio, further improve the return on net assets, expand business and provide more diversified financial services, accelerate the development of institutional and asset management businesses, and better optimize and strengthen them. at the same time, it will help optimize competition within the industry, promote the improvement of the industry's service capabilities and efficiency, and better provide comprehensive financial services for the real economy.

industry insiders predict that this will release nearly 100 billion yuan of funds, promote effective improvement of capital utilization efficiency, and increase services to the real economy and residents' wealth management.

the revision also strengthened supervision of the securities industry. the regulations set strict risk index calculation standards for securities companies to carry out over-the-counter derivatives and other businesses, strengthened capital constraints, and enhanced supervision.

shen juan said that this is the implementation of the requirements of the central financial work conference on comprehensively strengthening institutional supervision, behavioral supervision, functional supervision, penetrating supervision, and continuous supervision. it clarifies that securities companies should adhere to the principle of prudence to calculate risk control indicators, reflect the matching of business development and compliance risk control, consolidate the foundation of risk prevention and control, and lay a solid foundation for high-quality development.

balancing safety and efficiency

this revision is the second revision of the risk control indicator calculation standards for securities companies in more than four years. the current rules began with the "calculation standards for risk control indicators of securities companies" in january 2020. the risk control indicator system is centered on net capital and liquidity. after years of practice, the securities industry's risk resistance has steadily improved overall. the four core risk control indicators of risk coverage ratio, capital leverage ratio, liquidity coverage ratio, and net stable funding ratio have been maintained at 1.5-2.5 times the regulatory standards for a long time. the industry has continued to develop steadily without major risk events. the risk control indicator system has played an important role in improving the risk management level of securities companies and enhancing the industry's ability to resist risks.

china securities journal reporters learned from relevant persons close to the regulatory authorities that this revision mainly reflects four aspects of regulatory orientation. first, it highlights comprehensive coverage. all business activities of securities companies are included in the scope of risk control indicators, the completeness of the risk control indicator system is improved, and the foundation of risk control is consolidated. second, it highlights prudence and strictness. strictly set risk control indicator calculation standards for innovative businesses and businesses with higher risks, and guide securities companies to take the path of capital-intensive, professional and stable development. third, strengthen risk management. according to the risk management level of securities companies, business risk characteristics and term matching, reasonably improve the calculation standards, and improve the scientificity and effectiveness of risk control indicators. fourth, promote the function. guide securities companies to optimize business structure and asset allocation, increase efforts to serve the real economy and residents' wealth management, improve capital utilization efficiency, and become an important force in promoting the healthy, stable and high-quality development of the capital market.

industry insiders pointed out that this adjustment has improved the scientificity, effectiveness and orientation of risk control indicators, aiming to enhance the initiative and effectiveness of comprehensive risk management and lay a good foundation for enhancing investment banking service capabilities. at the same time, capital constraints on key businesses are strengthened, reflecting the orientation of strict supervision and maintaining the bottom line of no systemic risk.