On December 18, the Financial Association reported (Reporter Zhou Xiaoya) that the product scale of on-market and off-market Index has set a record for the fastest growth, and Institutions are undoubtedly an important boost to the scale of China International Capital Corporation A500 index products.

Brokerage firms are not only pushing the sales of on-market China International Capital Corporation A500 ETFs but also supporting the development of ETFs through substantial cash purchases.

The Financial Association has sorted out the top ten holders of the 22 listed China International Capital Corporation A500 ETFs, where a total of 65 positions belong to Brokerage firms (excluding the top ten holders designated as Brokerage asset management products), involving 22 Brokerage firms.

In terms of shareholding proportion, although individual investors primarily hold the China International Capital Corporation A500 ETF overall, Brokerage firms are also one of the main institutional investors in the product. Behind this, needs such as proprietary trading and asset allocation have driven Brokerage firms to increase their holdings of ETFs.

12 Brokerage firms hold more than 0.1 billion shares.

Among the 22 listed China International Capital Corporation A500 ETFs, Brokerage firms have become a major institutional buying force, with the top ten holders of 17 products showing the presence of Brokerage firms, accounting for more than 70%.

From the perspective of shareholding, by the time of the listing of the 22 China International Capital Corporation A500 ETFs, Brokerage firms among the top ten holders held a total of 4.635 billion shares. Roughly estimating based on the issuance volume of the 22 products (44 billion shares), at the time of listing, the shareholding proportion of Brokerage firms exceeded 10%.

Among them, 12 brokerages listed among the top ten holders of the 500ETF, with a total shareholding exceeding 0.1 billion shares.GTJA Securities not only appeared as the top holder of the 500ETF the most times (9 times), but also has the largest total shareholding (1.081 billion shares).

In both the Dafa 500ETF and the ICBC 500ETF, GTJA Securities ranks as the largest holder, with holdings of 0.171 billion shares and 20 million shares respectively, accounting for 8.57% and 10% of the shares.

GTJA Securities is also the second largest holder of the Wanjia 500ETF, Tianhong 500ETF, Huabao 500ETF, and Jiashan 500ETF, with shareholdings mostly exceeding 0.1 billion shares.

Following closely is HTSC, which appeared among the top ten holders of 5 different 500ETFs, with a total shareholding reaching 0.731 billion shares.

Specifically, the largest 500ETF by scale - the GTJA 500ETF - had HTSC as its largest holder before listing, with a holding of 88.8609 million shares, accounting for 4.44% of the shares. Additionally, HTSC was also the largest holder before listing of the Wanjia 500ETF and Huatai-PB 500ETF, with holdings of 0.22 billion shares and 0.308 billion shares respectively.

The holding shares of Galaxy Securities and China International Capital Corporation in the listed 500ETFs are 0.476 billion shares and 0.409 billion shares respectively. The largest holders of the Huaitianfu 500ETF and Southern 500ETF before listing were both Galaxy Securities, holding 79.1154 million shares and 0.15 billion shares respectively. China International Capital Corporation is the second largest holder of the Dafa 500ETF and Taikang 500ETF.

In addition, East Money Information, Guosen Securities, and CITIC SEC had shareholdings exceeding 0.2 billion shares in the 500ETF before listing, while Changjiang Securities, China Merchants, SWHY Securities, Guolian Securities, and Founder Securities had shareholdings above 0.1 billion shares.

Why do brokerages hold?

What are the reasons for brokerages to hold ETFs? A public fund manager in East China explained that brokerages in the holder category, through self-operated Accounts, may be driven by multiple needs such as market-making business, self-investment allocation, and derivatives trading. Each brokerage will clarify the purposes of the funds within their Accounts.

In the operation of ETFs, ETF market makers play a role in providing liquidity, and the 500ETF also saw an increase in market makers after its listing. However, the aforementioned fund manager believes that although brokerages that provide market-making services will hold corresponding shares of ETFs, the shares held solely for market-making needs are unlikely to make brokerages enter the top ten holders.Brokerage self-operated Accounts that make it into the top ten holders usually hold due to a combination of multiple needs.

A public fund individual also mentioned that ETF shares held for market-making purposes are often bought after the ETF is listed. The self-operated Accounts of brokerages that held prior to the ETF launch are more likely driven by allocation needs.

Furthermore, this public fund individual believes that the buying of self-operated Accounts by brokerages before the listing of the 500ETF, even entering the top ten holders, may be due to a bullish outlook on the investment prospects of the Index, but there may also be situations of 'assisting funds' entering and exiting.

'It depends on the subsequent changes in shareholding of related ETFs, and it is possible that some brokerages enter the market based on allocation needs and then take profits after gaining.' said the public fund individual.

Overall, in recent years, institutional investors represented by brokerages and insurance companies have become an important source of funds for ETFs. Previously, the Shenzhen Stock Exchange's 'ETF Investment Trading White Paper (June 2024)' mentioned that with a large increase in holdings from institutional investors in the first half of this year, the holding proportions of institutional and retail investors have also changed. As of the end of June 2024, institutional and retail investors' holding proportions of ETFs were 57% and 43%, respectively.

Among them, broad-based ETF is one of the preferred subtypes of ETF by institutional investors. The aforementioned "White Paper" mentioned that as of the end of June 2024, institutional investors held the highest proportion of broad-based ETF among domestic stock ETFs, with a total holding scale of 877.454 billion yuan (after penetrating connected funds), accounting for 69.60%, mainly including 300ETF, Chinaamc Shanghai A50 Exchange Traded Fund, and 500ETF.

In addition, strategy ETFs represented by dividends are also highly favored by institutional investors, with a holding scale of 41.056 billion yuan, accounting for 55.97%.