2021, which has just passed, is a highlight year for the issuance of public funds in the settlement mode of securities companies. In the whole year, 186.7 billion funds were issued in the settlement mode of securities companies, an increase of nearly 80% over 2020. Among them, there are many star products with an initial share of more than 5 billion.
from the perspective of business model, the securities settlement fund can exempt the 30% limit of commission sub warehouse, helping securities companies achieve a significant breakthrough in commission sub warehouse. 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 promoting the long-term investment concept.
However, the Chinese reporter of securities companies learned from the interview that the current development of securities settlement funds is still subject to many constraints, especially compared with banks and other channels, most securities companies have a significant lack of product consignment ability, which makes it difficult for fund companies to make up their minds to completely bind securities companies. Among securities companies, companies with limited consignment ability 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.
In the following two years, although the bond settlement fund developed, the overall progress was slow. From 2018 to 2020, the number of new development funds adopting bond settlement mode did not exceed 100, and the issuance scale was also at a low level. In 2020, under the background of the outbreak of public funds throughout the year, the scale of new securities issuance and settlement funds was less than 100 billion, accounting for only 2.61% compared with new funds in the whole market.
However, with the promotion of business, the proportion of bond funds in the whole market new development funds has reached about 6% in 2021. The total share of new development funds in the whole year is 3.02 trillion, of which the scale of bond funds is 186.782 billion.
from the situation of fund companies, the settlement mode of securities companies is more common among small and medium-sized fund companies at this stage. In 2021, 80% of the issued bond settlement funds came 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.
In an interview with Chinese reporters of securities companies, the relevant person in charge of Bodao Fund said that the pilot began at the end of 2017 and turned to the conventional settlement mode of public fund securities companies in 2019, which fully opened up the multi-party demands of securities companies, fund companies and customers, and formed a win-win situation among the three parties.
“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, they meet the requirements Securities companies’ customer wealth management needs. ” Analysis by the person in charge of Bodao fund.
As one of the first six fund companies to pilot the transaction settlement mode of securities companies in 2017, Bodao fund has piloted the first bond settlement mode product Bodao Qihang hybrid fund since August 2018. At present, 20 equity fund products have been established, all of which adopt the settlement mode of securities companies, with a total scale of more than 23.6 billion by the end of the third quarter. Among them, more than ten securities companies have cooperated, including Guotai Junan Securities Co.Ltd(601211) , China Industrial Securities Co.Ltd(601377) , Sinolink Securities Co.Ltd(600109) , Orient Securities Company Limited(600958) , Citic Securities Company Limited(600030) , Gf Securities Co.Ltd(000776) , Haitong Securities Company Limited(600837) , China Securities Co.Ltd(601066) , Founder Securities Co.Ltd(601901) .
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 a number of benefits to securities companies.
Qi Yanran, an analyst at Everbright Securities Company Limited(601788) , pointed out 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 the important thing is that under this mode, the 30% limit of commission sub position can be exempted, 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 market for trading within the brokerage business system of securities companies, and the trading commission can be distributed by 1-3 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 obtain 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 the Chinese reporter of the securities firm that since the products sold through the bank channel are also settled by the securities firm, the securities settlement business can even be regarded as “plus leverage” in terms of commission income.
Xia Changsheng, an analyst at Tianfeng Securities Co.Ltd(601162) , said: “under the securities settlement mode, the incentive for the transaction commission of settlement securities companies has increased, which has promoted the deep binding between funds and securities companies, and 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 sustainable marketing, more attention is paid to the improvement of ownership in order to obtain sustainable 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.
“I have no one, and I have my advantages. Under such circumstances, securities companies can have more ‘exclusive’ advantages on the product side, so as to achieve more support for the wealth management business.” When talking about the securities settlement business, the head of investment advisory strategy of a securities firm said that the investment advisory strategy team and fund research team can even intervene and even lead the securities settlement business earlier. The investment advisory investment research system screened out more potential fund managers and deeply bound through the securities settlement business in the early stage of its scale outbreak.
the investment adviser frankly said, “through systematic screening, some high-quality fund managers are excavated to form deep binding, which will greatly improve the company’s fund investment adviser, bond settlement and other wealth management businesses in the future.”
Xia Changsheng pointed out in this regard that the supply of customized high-quality products or the formation of the unique competitiveness of settlement securities companies can not only make use of the consignment lever and continuously expand the holding volume to continuously obtain commission income, but also become a flow inlet to improve customer stickiness. The two public offering products issued by Ruiyuan fund in total, Ruiyuan growth value and Ruiyuan equilibrium value are bond settlement products, with a net value of more than 50 billion as of the third quarter of last year. It can imagine the incremental utility it brings to the Citic Securities Company Limited(600030) product consignment and Commission for the cooperative bond settlement business.
securities companies actively layout
Due to the huge business possibilities brought by the securities settlement fund to securities companies, many securities companies have been eager to layout. According to the statistics of Tianfeng Securities Co.Ltd(601162) , as of the third quarter of 2021, the scale of Citic Securities Company Limited(600030) , Gf Securities Co.Ltd(000776) , China Industrial Securities Co.Ltd(601377) settlement funds reached 101.7 billion yuan, 58.7 billion yuan and 43.1 billion yuan respectively.
Gf Securities Co.Ltd(000776) relevant people previously told securities companies in China 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. Its participating southern fund and the company jointly issued an initial share of more than 14 billion, pushing the scale of China Industrial Securities Co.Ltd(601377) bond settlement business to the forefront of the industry.
For most fund companies, the most concerned 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 a Chinese reporter of securities companies. Some public offering funds of securities companies prefer to cooperate with securities companies without equity relationship rather than choose the parent company. The main reason behind this is 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.
the focus on the product consignment ability also puts pressure on many securities companies with general brokerage business foundation. Many securities companies admit that it is difficult to carry out the securities settlement business due to the short board at the sales end.
“The channel capability of securities companies is an important consideration for public offering to choose the securities settlement mode, and it is also the core factor limiting the development of securities settlement business. If the channel capability of securities companies is insufficient, it will be difficult to carry out securities settlement business.” Shenwan Hongyuan Group Co.Ltd(000166) Xu Yishan, a non bank analyst, told Chinese reporters of securities companies.
(brokerage China)
