2021 is the year of Gaoguang, which is issued by the public fund of securities companies’ settlement mode (hereinafter referred to as securities settlement fund). In the whole year, the issuance share of funds adopting this model reached 186.7 billion, an increase of nearly 80% over 2020, including star products with an initial share of more than 5 billion.
From the perspective of business model, the securities settlement fund can be exempted from the 30% limit of commission sub position, which helps securities companies achieve a significant breakthrough in commission sub position. At the same time, the customized attribute of securities settlement funds is stronger. After in-depth combination with securities companies’ fund investment advisers and other businesses, it can provide more exclusive product support for securities companies in wealth management. In addition, under the bond settlement mode, the long-term holding of customers and the interests of securities companies are unified, which is more conducive to the practice of long-term investment philosophy.
However, according to the investigation by the Chinese reporter of securities times and securities companies, the current development of securities settlement funds is still subject to many constraints. In particular, compared with banks and other channels, most securities companies have an obvious lack of consignment capacity, which makes it difficult for fund companies to make up their minds to completely bind securities companies. In addition, among securities companies, companies with limited consignment capacity are also difficult to compete with their peers.
bond settlement funds continue to explode
At the end of 2017, the CSRC guided Shanghai Stock Exchange and Shenzhen Stock Exchange to launch the pilot of securities trading mode conversion of newly established public fund managers. Six newly established public funds, including Oriental alpha fund, Kaishi fund, Bodao fund and Guorong fund, became the first batch of pilot fund companies to adopt the settlement mode of securities companies.
With the promotion of business, in 2021, bond funds accounted for about 6% of new funds in the whole market, and the total share of new funds in the whole year was 3.02 trillion, including 186.782 billion bond funds.
From the perspective of fund companies, the settlement mode of securities companies is more common among small and medium-sized fund companies at this stage. 80% of the securities settlement funds issued in 2021 come from small and medium-sized fund companies with a total management scale of less than 50 billion yuan. However, large and medium-sized fund companies are also gradually joining the exploration of bond settlement business, which has also brought more popular fund products.
China Merchants Fund, China Southern Fund, ICBC Credit Suisse fund and Boshi fund are all in the list of securities settlement business. Southern Fund and China Industrial Securities Co.Ltd(601377) cooperative southern xingrun value hold an initial scale of RMB 14.139 billion a year, becoming the largest initial product among the annual bond settlement funds.
The relevant person in charge of Bodao Fund said in an interview with the Chinese reporter of the securities times securities firm that the pilot began at the end of 2017 and turned to the conventional settlement mode of public fund securities firms in 2019, which fully opened up the multi-party demands of securities firms, fund companies and customers and formed a tripartite win-win situation.
“Firstly, by selling fund products, securities companies can expand and consolidate their own customer base, better realize their own wealth management transformation, and increase transaction business income; secondly, the fund company has expanded a powerful sales channel. With the excellent performance of equity funds in recent two years, the fund sales and retention scale of securities companies have also been continuously improved; finally, it meets the requirements Securities companies’ customer wealth management needs. ” Analysis by the person in charge of Bodao fund.
multiple benefits of securities business
The rapid development of securities settlement funds is inseparable from the support of policies, but the more powerful promoters behind them are securities companies. From the perspective of business model, securities settlement fund has brought multiple benefits to securities companies.
Qi Yanran, an analyst at Everbright Securities Company Limited(601788) , said that under the brokerage settlement mode, the fund company can select one or more securities companies to carry out securities trading, calculate and pay the Trading Commission according to the securities trading amount, and it is important that the 30% limit of commission sub position can be exempted under this mode, In other words, the annual Trading Commission of a single fund management company buying and selling securities through the trading seat of a securities company shall not exceed 30% of the Trading Commission of all funds in the current year.
This also means that under the settlement mode of securities companies, the public offering must enter the transaction within the brokerage business system of securities companies, and the transaction commission can be distributed by 1 to 3 settlement securities companies.
“In the past, when banks settled, each fund had to choose more than three securities companies for trading. A single securities company could not get more than 30% of the Trading Commission at most, but the securities settlement business could put the transactions in the securities companies for settlement, and the scale of the trading commission would be greatly increased.” The head of the brokerage business department of a leading securities firm in Shanghai told reporters that since the products sold through bank channels are also settled by securities firms, the securities settlement business can even be regarded as “plus leverage” in terms of commission income.
Tianfeng Securities Co.Ltd(601162) analyst Xia Changsheng said, “under the securities settlement mode, the incentive to settle the Trading Commission of securities companies has increased, which has promoted the deep binding between funds and securities companies. The channel resources of securities companies are inclined to the product, such as high-intensity publicity and independent assessment of products; in the process of continuous marketing, more attention is paid to the improvement of ownership in order to obtain continuous commission income.”
In addition, under the bond settlement mode, the long-term holding of customers and the interests of securities companies are unified, which is more conducive to promoting the long-term investment concept. For the brokerage end, the bond settlement model pays more attention to the back-end sustainable income, which will make the brokerage and the manager have stronger business stickiness, help to serve customers and expand the product scale for a long time under the same goal; Securities companies are also more motivated to increase the number of funds, because only when the number of funds is expanded can they have more and more stable commission income.
It is noteworthy that the natural customization attribute of securities settlement business also allows securities companies to see the huge business opportunities hidden therein. The securities settlement business is basically a customized cooperation mode between a securities firm and a fund company, which is conducive to customizing high-quality products for public funds and improving customer satisfaction.
securities companies actively layout
Due to the huge business possibilities brought by securities settlement funds to securities companies, many securities companies can’t wait to layout. According to the statistics of Tianfeng Securities Co.Ltd(601162) , by the end of the third quarter of 2021, Citic Securities Company Limited(600030) , Gf Securities Co.Ltd(000776) , China Industrial Securities Co.Ltd(601377) settlement funds had reached 101.7 billion yuan, 58.7 billion yuan and 43.1 billion yuan respectively.
Gf Securities Co.Ltd(000776) relevant people previously told reporters that as more and more public fund managers realized the benefits of the bond settlement model, the industry ushered in an outbreak of business in 2021. Gf Securities Co.Ltd(000776) as the first batch of companies to launch the settlement mode of securities companies, the customer range covers the newly established public offering, husband offering, insurance asset management, banking and financial management subsidiaries, and the business scale continues to lead.
It is understood that Gf Securities Co.Ltd(000776) is the first securities firm to apply the innovation of the bond settlement model to the insurance subsidiary. After the bond settlement model is transferred to the routine, it continues to optimize and innovate the model under the guidance of the regulatory authority to continuously meet the new needs of the market. At present, the optimization scheme of ETF’s securities settlement business model has been completed, and the QFII like transaction settlement model has been innovatively designed, forming a new transaction settlement model highlighting the advantages of brokerage transaction management and custodian bank fund management. For relevant new models, Gf Securities Co.Ltd(000776) has cooperated with e fund, GF fund, Bodao fund and other managers.
From the perspective of resource advantages, holding and participating high-quality public fund companies and securities companies with outstanding consignment ability have more obvious advantages in securities settlement business. In the bond settlement products of Gf Securities Co.Ltd(000776) cooperation, gf and e fund contributed most of the shares. China Industrial Securities Co.Ltd(601377) also benefited from this. The initial share of products jointly issued by the South Fund and the company in which it participated exceeded 14 billion, pushing the scale of China Industrial Securities Co.Ltd(601377) bond settlement business to the forefront of the industry in one fell swoop.
For most fund companies, the most concern is still the product consignment ability of securities companies.
“When fund companies cooperate with securities companies, the first thing is to be able to sell products and sell on a larger scale.” A small public offering person in Shanghai told reporters that some public offering funds of securities companies prefer to cooperate with securities companies without equity relationship rather than choose the parent company. Behind it is mainly the consideration of product consignment ability. Many products of some large public offerings are still settled in banks, which is inseparable from the huge sales system of banks. If the sales capacity is similar, securities companies may have more advantages in fund settlement business.
(Securities Times)
