More securities firms to make innovations

China Securities Industry Association made public Wednesday the second batch of five domestic securities companies that have passed appraisal to pilot innovations, Shenzhen Daily reported Friday.

These five securities dealers are Orient Securities, Guosen Securities, GF Securities, Merchants Securities and Yangtze Securities.

The first group of three securities dealers CITIC Securities, Everbright Securities and China International Capital Corp. to pilot innovations was announced by the association Oct. 12.

Such innovations, which will cover business operations, operating mode, and organizational setup, are aimed to extend the business scope of securities dealers from traditional businesses to emerging fields, raise their profitability and risk prevention capacity, sharpen their competitiveness, and phase out small ones through mergers and acquisitions.

Most Chinese securities dealers have now been in difficulty owing to bearish stock market over the past three years.

Early in August, China Securities Regulatory Commission, the government watchdog for the securities and futures industry, issued the Circular on Pushing forward Innovations in the Securities Industry.

On Aug. 13, China Securities Industry Association issued procedures for appraising securities companies to engage in related innovation activities.

According to the procedures, a securities company to make such innovations shall meet the following requirements: the net capital in the latest year shall not be less than 1.2 billion yuan (US$145 million); the balance of current assets in the latest year shall not be less than 150 percent of the balance of current liabilities; the sum of external guarantees and contingent debts of other forms in the latest year shall not exceed 10 percent of the net assets.

Of the five securities companies in the second batch, GF, Guosen, Merchants and Orient respectively took the sixth, seventh, eighth and 16th places in the ranking of all securities dealers in terms of stock and fund trading volume in 2003.

Source: Shenzhen Daily-Agencies