| China Securities Regulatory Commission, associating with State Administration of Taxtion, and National Development and Reform Commission, issued the Notice of Regulating Securities Trading Commission in April 4, 2002, which regulated the upper limit of trading commission. The rules of competition have changed drastically, security brokerage' competition has come into a new era.This paper makes a study of management environment, competitive strategies, profitability of security brokerage theoretically and empirically, and discusses the competitive strategies after the notice brought into effect. It includes the five parts: domestic circumstance, abroad experiences, theoretical research, empirical study, and strategy suggestions.Firstly, it discusses that the implement of the Notice has an effect on domestic security brokerage. As the primary cost of security transaction, the floatation of trading commission would change the microstructure of security market. When the trading commission was fixed, security market has the following distinctive features: market concentration, less service differentiation, high entry and exit barriers, concentration of market share, coexistence of different management models. Security market has reformed: the decreasing profit, differentiation and reconstruction, explosive growth of online trading.Secondly, the development of security brokerage abroad is introduced. Global security commission system takes on the tendency of liberalization, differentiation, and descension. Subsequently, income decreased, market is activated, M&A boosted, and innovation motivated. Whereas the domestic environment is totally different from foreign market, not only market principle but also the transaction structure, the useful experiences of foreign market include: business model innovation, the reformation of organization structure, flexible pattern of price making, expansion by M&A etc.The third chapter focuses on theoretical research. The object is a security department: the minimal unit of security brokerage. Matrix of competitive strategy in industrial economics and Game Theory are applied, the model of competitive strategy is set up, and modified according to the behavior characteristics of security investors. It draws the following conclusions: (a) when the commission is fixed, security investors take consideration of the distance and convenience of transaction. The primary means of improving profit is the increase in department numbers, (b) when the commission floats, the equilibrium price amount to the department cost plus the transportation cost of investors subtract investor preference. Less departments, closer the commission to monopoly price. More departments in developed regions, lower commission, (c) Investor preference intensifies the competition of commission, (d) The turnover of large department is excessive, and enhances by the investor preference, (e) Online trading attains the small share of market, which will increase in long term.The forth chapter focuses on empirical research. The datum come from website. The statistical methods include correlation analysis, regression analysis, etc. it draws the following conclusions: (a) the concentration of security brokerage is increased steadily if the trading commission floats, (b) the scale effect of security departments is obvious, (c) synthetic security companies did not gain the competitive advantage. They should integrate the resource of what they have, supplement their advantage. The break even research indicates that the most effective method is to reduce the number of departments, the cutdown of fixed costs in the next place, then the accession of security turnover.The last but not the least, it is suggested that adapt the management environment. Multi-level market subdivision will establish competitive advantage. The cultivation of business innovation mechanism will improve the service differentiation. Strength of innovation will be boosted up. Hierarchical direct with light assets will reduce cost. Consequentl...
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