Key investment points:
Event: on January 7, the CSRC drafted the pilot provisions on stock market making trading business of securities companies on the science and Innovation Board (Draft for comments) (hereinafter referred to as the market making provisions), which intends to introduce the market maker mechanism into the science and innovation board. The provisions on market making covers six parts: market maker access conditions, access procedures, market making bond source arrangement, internal control, risk monitoring, supervision and law enforcement, including 17 articles.
The trial implementation of the market maker system on the science and innovation board is conducive to improving market efficiency. At present, the A-share market trading system adopts the bidding trading system, and from overseas experience, the Nasdaq market in the United States is a model for the successful implementation of the market maker system. This time, the scientific innovation board tried out the market maker system to promote the reform of the trading mechanism and further integrate the system with the international market. Making a market system is conducive to improving market liquidity, promoting price discovery and stabilizing the market, and improving market efficiency. Specifically, under the market maker trading mechanism, the transaction is completed between investors and market makers. Market makers can provide and increase liquidity supply, which helps to further improve the liquidity and activity of the market; Through the market maker’s continuous quotation and response quotation to the buyer and the seller, it is conducive to promote reasonable pricing and give full play to the function of market price discovery; In addition, the introduction of market makers will stabilize the extreme price fluctuations of stocks, so as to stabilize the market.
As of January 7, there were 379 listed companies on the science and innovation board, with a total market value of 5.60 trillion yuan, accounting for 5.87% of the value of a stock market. In 2021, the turnover of the Sci-tech Innovation Board was 1.044 billion yuan, accounting for 4.06% of the A-share turnover. In 2021, the average daily turnover rate of the Sci-tech Innovation Board was 5.98% respectively, of which 36.9% of the Sci-tech Innovation Board shares had a daily turnover rate of less than 3%. By introducing the market maker mechanism and improving the pricing and transaction efficiency, it is conducive to invigorating the market, meeting the market trading and investment needs, conducive to the long-term healthy development of the science and innovation board, and providing stronger financing support for the development and growth of science and innovation enterprises.
Market making trading business is strictly allowed to enter and risk control is strictly enforced. In view of the strong professionalism of market making trading business, the market making pilot business has high requirements on the business, system, personnel and risk control of securities companies. According to the provisions on market making, in addition to having perfect business plans, professionals, technical systems and other conditions, the securities companies participating in the pilot at the initial stage shall also meet the requirements that the net capital in recent 12 months shall not be less than 10 billion yuan and the classification rating in recent three years shall be above class A (inclusive). In terms of securities sources, securities companies can use their own stocks, borrow from securities companies or other stocks that have the right to dispose of. In terms of risk control, it is necessary to incorporate market making transactions into the comprehensive risk management system, fill in risk control indicators with reference to self operated positions, and the market making shareholding shall not exceed 5%.
Investment view: it is conducive to the transformation of self operated business of securities companies and good for head securities companies. According to the experience of securities companies in overseas mature markets, the transformation from proprietary business to market making trading business in the heavy asset business of securities companies is the general trend of the industry. The directional investment of proprietary business is volatile, the yield depends on the market environment, and the income is unstable. The market maker takes the bid ask price difference as the main source of income, which is conducive to improving the robustness of securities business performance. The pilot market maker system of the science and Innovation Board will promote the transformation of the self operated business of securities companies to market making trading business. Based on the total market value of the science and Innovation Board on January 7, the upper limit of the market value space of the pilot securities companies’ positions is about 280 billion yuan. According to the provisions on market making, due to the strict access conditions for the pilot business of market making trading, the head securities companies with good compliance risk control are expected to have the business first mover advantage, and the head securities companies have obvious advantages in capital strength, investment and research strength, pricing ability, risk management and other professional qualities, and have seized the first opportunity for the de directional transformation of their own business, We believe that the introduction of market making business opportunity system into the science and Innovation Board will benefit the head securities companies. It is recommended to focus on Citic Securities Company Limited(600030) (600030. SH), China International Capital Corporation Limited(601995) (601995. SH), Huatai Securities Co.Ltd(601688) (601688. SH).
Risk warning: the progress of capital market reform is lower than expected; The policy was less than expected.
