Caixin reported on July 16th (contributing reporter Qianqian Sheng) that the Beijing Stock Exchange and the National Equities Exchange and Quotations Company released the results of the practice quality evaluation of securities companies in the second quarter of 2024.

The results show that CITIC Securities took the lead in this evaluation, followed by Soochow Securities, Kaiyuan Securities, Haitong Securities, and SWHY. Guosen Securities, East Money Information, CITIC Securities, GF Securities, and Guotai Junan Securities ranked in the top ten with their combined scores.

Soochow Securities performed outstandingly in the latest quarterly practice quality evaluation, jumping from 18th in the previous quarter to 2nd. Meanwhile, Haitong Securities and Sinolink's rankings also saw significant improvements, rising by 12 and 14 spots, respectively, from the previous quarter.

However, not all brokerages improved their rankings, and some experienced significant declines. First Capital's ranking dropped the most noticeably, from first place in the previous quarter to 33rd, indicating significant volatility. Minsheng Securities, Wanlian Securities, Zheshang Securities, and GTJA also saw significant declines in their rankings, all falling from the top ten in the previous quarter to 26th, 57th, 28th, and 25th, respectively.

BSE's business is key to the shuffle in the rankings.

In the practice quality evaluation of securities companies in the second quarter of 2024, a total of 114 brokerages participated in the assessment, among which the scores of 12 securities company subsidiaries were combined with those of their parent companies to give a total score. The number of brokerages that actually participated in the ranking was 102. The top ten rankings of the list changed significantly this quarter, reflecting the importance of BSE's business layout on the overall performance of brokerages.

CITIC Securities climbed from third place in the previous quarter to the first in the second quarter of 2024. This significant improvement was mainly due to its excellent performance in BSE's sponsor and M&A businesses, as well as its stable growth in the new third board recommendation and listing business.

Soochow Securities jumped from 18th in the previous quarter to second this time, for similar reasons as CITIC Securities. Soochow Securities scored more heavily in BSE's sponsor and M&A business.

Kaiyuan Securities maintained a steady upward trajectory, rising from fourth place in the first quarter to third. It is worth mentioning that Kaiyuan Securities performed well in the new third board research business of BSE, achieving the highest score in any single category and demonstrating its deep research capabilities. Kaiyuan Securities has submitted an application for BSE's stock making business qualification and may further consolidate its ranking if approved.

Brokerages' business layouts in BSE have a significant impact on their rankings. The first and second places in the previous quarter, First Capital and Zhongtai Securities, benefited from their high scores in BSE's sponsor and M&A businesses. This time, CITIC Securities and Soochow Securities were able to stand out because they were gaining points on BSE's sponsor and M&A businesses, which were essentially suspended in the second quarter of 2024.

The evaluation criteria for brokerages' practice quality at BSE and the new third board are mainly divided into two categories: professional quality and compliance quality. The former is a positive factor, while the latter is a negative one. Although some brokerages received significant score increases for their professional quality, the penalty for their compliance quality should not be ignored.

Statistics show that 18 brokerages were penalized for compliance problems in the second quarter, among which CITIC Securities, Central China Securities, and GTJA ranked at the top of the penalty list with scores of -8, -8, and -6.67, respectively. Specifically, brokerages were penalized most heavily for their new third board continuous supervision and BSE sponsor businesses.

Central China Securities faced a severe test in this evaluation and only scored 98.91 points, becoming the only brokerage with a score below 100 points and ranking at the bottom. This is the first time that Central China Securities has ranked last in professional quality evaluation, and its Q1 ranking was still at 53rd place. In terms of product structure, the operating incomes of products with 10-30 billion yuan were 401/1288/60 million yuan, respectively.

It is worth noting that Central China Securities did not achieve the expected results in the four IPO projects listed on the National Equities Exchange and Quotations during the first half of the year. All of them were terminated, which may have had a negative impact on its overall evaluation.

Expanding and laying out on the National Equities Exchange and Quotations is a wise choice.

In the context of the overall pressure on brokerage investment banking business income, expanding and laying out on the National Equities Exchange and Quotations is a wise choice.

As a key link in the capital market ecosystem, brokerages provide various comprehensive services to National Equities Exchange and Quotations-listed enterprises and help the development of "innovative small and medium-sized enterprises." At the same time, the rise of the National Equities Exchange and Quotations has also opened up new areas of business for brokerages in brokerage, investment banking, asset management, wealth management consulting, and other fields. Especially for small and medium-sized brokerages, their investment banking business is more likely to make a comeback on the National Equities Exchange and Quotations.

At the same time, the unique business model of the National Equities Exchange and Quotations-"sponsor first, direct investment later"-allows brokerages to directly participate in equity investment in companies intending to go public on the National Equities Exchange and Quotations after launching investment banking projects. And they can also participate in strategic placement during the issuance stage to obtain pre-IPO investment opportunities. This model not only encourages brokerages to explore and nurture high-quality companies with growth potential but also injects strong power into their direct investment business and even promotes the innovation of their profit model to a certain extent.

According to Wind data, as of July 15th, there were 249 listed enterprises on the National Equities Exchange and Quotations, with a total market value of 300.9 billion yuan. The number of listed enterprises and the total market value have shown a continuous growth trend.

From the perspective of sponsor entities, among the 249 listed companies on the National Equities Exchange and Quotations, 63 brokerages acted as the first sponsor (including joint sponsorship). Among them, China Securities Co., Ltd. sponsored the most companies, with 24; SWHY followed closely with 21; KGI Securities and Soochow Securities both sponsored 14 companies, tied for third place; AN Securities sponsored 13 companies, ranking fifth; Zhongtai Securities sponsored 12 companies, ranking sixth; Citic Securities and Changjiang Securities also sponsored nine companies, Dongbei Securities and Guoyuan Securities sponsored eight companies.

It is worth mentioning that the number of sponsors by traditional top investment banks such as China International Capital Corporation, Huatai Securities, and Haitong Securities did not make it into the top ten in the industry.

On the other hand, according to Wind data, since 2024, KGI Securities, GTJA, and China Securities Co., Ltd. have been ranked the top three in the number of entrepreneur recommended listing on the National Equities Exchange and Quotations, and Guorong Securities, Guotou Securities, China Securities Co., Ltd., and SWHY have also performed well.

The ranking of recommended listings on the National Equities Exchange and Quotations is significantly similar to the ranking of sponsor brokerages, reflecting that the brokerages that originally occupied an advantageous position in the New Third Board market have profoundly recognized the strategic importance of laying out on the National Equities Exchange and Quotations. The experience and resources accumulated by these brokerages in the New Third Board have been effectively transformed into a competitive advantage in the National Equities Exchange and Quotations market, indicating that leading brokerages have not only recognized the potential of the National Equities Exchange and Quotations as an emerging market but have also taken action in laying out this market.

17 brokerages approved to make markets in the National Equities Exchange and Quotations.

In terms of market-making businesses, Guoyuan Securities announced recently that the company has obtained the business qualifications for market-making transactions in listed securities and became the first brokerage to receive such qualifications in 2024. As of now there are 18 brokerages authorized to perform market-making transactions in listed securities, 18 brokerages authorized to carry out options market-making business, and 13 brokerages authorized to carry out stock index options market-making business. In addition, according to the North Equities Exchange and Quotations website, there are currently a total of 17 market-makers (excluding Guoyuan Securities that was just approved).

Recently, the National Equities Exchange and Quotations completed a market-maker evaluation for the second quarter of 2024 and implemented a full exemption of handling fees for market-making transactions for Northeast Securities, KGI Securities, and Guoyuan Securities, the top 5% in comprehensive ranking. Shanghai Securities, Haitong Securities, and Huayuan Securities, among others, have also received varying degrees of exemptions. This move is not only an economic reward for brokerages but also an affirmation of their market-making business performance. It can promote brokerage business expansion and market position improvement from various perspectives.