The scientific innovation board will introduce the market maker system, and securities companies will have another way to “generate income”. Recently, the CSRC issued the provisions on the pilot of stock market making trading business of securities companies on the science and innovation board, and the Shanghai Stock Exchange also publicly solicited opinions on the relevant rules of the market making trading business of the science and innovation board.
According to the pilot regulations, the threshold for the pilot of market makers on the science and innovation board is high, which puts forward higher requirements for the capital strength, compliance risk control and technical system of securities companies. Among them, the number of pilot securities companies will be reduced to 26 when the classified evaluation of “class a” and “net capital is no less than 10 billion yuan”.
In addition, the regulation also puts forward strict requirements for the pilot securities companies to improve the business isolation system, so as to prevent potential conflicts of interest between market making trading business and brokerage, proprietary trading, asset management and other businesses. Before submitting application materials to the CSRC, all securities companies need to pass the technical system evaluation test of the Shanghai Stock Exchange.
It is reported that in January this year, the Shanghai Stock Exchange invited 28 securities companies to mobilize and exchange on the market making trading of stocks on the science and innovation board. All securities companies expressed positive wishes to participate in the market making trading of stocks on the science and innovation board.
Since the business is an administrative licensing matter and involves the modification of terms such as business license and business scope change, it needs to be deliberated by the board of directors, the general meeting of shareholders and other parties. The Shanghai Stock Exchange suggests that all securities companies can consider the application first in combination with the time node of the annual general meeting of shareholders, and actively communicate with the regulators on the issues of concern. Based on this, various securities companies have also begun intensive preparations.
For example, Orient Securities Company Limited(600958) on March 22, the proposal of applying for the stock market making and trading business of science and Innovation Board was considered and approved by the interim meeting of the board of directors, which was passed by the interim general meeting of shareholders three days later Orient Securities Company Limited(600958) said that its subsequent application to carry out market making trading business of shares on the science and Innovation Board will carry out preparatory work on the basis of full demonstration of compliance and risk control, and make preparations in accordance with regulatory requirements in terms of business, system, personnel and risk control in advance.
According to the announcement of listed securities companies, in addition to Orient Securities Company Limited(600958) , Caitong Securities Co.Ltd(601108) , Sinolink Securities Co.Ltd(600109) , Soochow Securities Co.Ltd(601555) , Guosen Securities Co.Ltd(002736) , Founder Securities Co.Ltd(601901) and many other listed companies have recently held the board of directors and general meeting of shareholders to consider the proposals related to applying for market making on the science and innovation board.
“The implementation of the market maker system of the science and innovation board is slightly beneficial to the securities companies, which adds a profitable business to the securities companies. For the science and innovation board, the existence of market makers can greatly revitalize the trading volume of the science and innovation board and improve the liquidity of the science and innovation board as a whole.” A senior investment adviser of a large securities company in Beijing told reporters that the market making business of the science and innovation board is expected to provide considerable profit sources for securities companies with strong investment ability and relatively perfect risk control system, and the market and securities companies are expected to achieve “win-win”.
According to Orient Securities Company Limited(600958) introduction, the market making trading business of sci-tech innovation board is an innovative business. Securities companies fulfill the obligations of market makers such as providing bilateral continuous quotation and bilateral response quotation for Sci-tech Innovation Board stocks, so as to obtain the bid ask spread income. Participating in the market making of sci-tech innovation board can increase a new profit model. At the same time, market making trading business can extend the customer service chain and promote the company to develop comprehensive financial services of the whole business chain and the whole value chain.
According to Caitong Securities Co.Ltd(601108) calculation, assuming that the market value of securities companies’ market making positions is between 1% ~ 4%, the total market making scale of science and innovation board is expected to be 50 billion yuan ~ 210 billion yuan. Assuming that after the introduction of market makers, the trading volume will increase (to 55 billion yuan / day), the market making price difference will be 0.5%, and the market making transaction will account for 20%. It is estimated that the annual incremental income will be about 10 billion yuan to 13 billion yuan; According to the calculation of 90% profit rate, the incremental profit is about 9 billion yuan to 11.7 billion yuan.
