Transformation And Challenges On Securities Brokerage Business

Stock market, an important part of China’s financial market, hasbecome an integral part of Chinese people’s lives after20yearsdevelopment. By the end of2012, the total market capitalization of theShanghai and Shenzhen A shares reached22.53trillion yuan. There were114securities companies and240000practitioners in securities, totalassets of1.72trillion yuan. China’s stock market has become the secondlargest market capitalization market on the world, ranking first inemerging countries.For a long time, the securities brokerage business is still one of themain pillars of the securities company’s operating income. Before2011,the securities brokerage business contributed more than50%of thesecurities company profits. Under the current intense competition,excessive homogenization of the product and the commission decline ofsecurities brokerage business, many securities companies are exploring avariety of viable business models, finding the right brokerage businessmodel and ways to promote the securities brokerage businesstransformation. But in2013, China’s securities companies still have difficulties in transforming securities brokerage business.The increase inrevenue from asset management, investment advisory and other businessslowed down. New business needs to be improved in terms of productsand models.So how to develop, innovate and transform this kind of business hasbecome a focus of academic and practical circles of Chinese securitiesbrokerage business. This paper attempts to thoroughly analyze theproblems and challenges in the transformation process faced by domesticbrokerage business transformation process. By the case studies andtheoretical analysis, the paper also proposes effective measures so as toprovide reference for domestic securities industry brokerage businesstransformation. This article includes the following sections:1. Section one systematically summarizes the development statusquo and major profit model of foreign securities firms. Combined withthe practices in China, this section analyzes the models of securitiescompanies both at home and abroad from a comparative perspective andprobes into the models of brokerage business in American securitiescompanies. This provides a broad perspective and logical support forfuture research on Chinese securities brokerage business.2.By the framework of question-raising and problem-solving,section two firstly outlines the phase of the development and status quo ofChina’s securities brokerage firm, then analyzes China’s securities brokerage business’s problems and issues through the data analysis toexplore the deep-seated reasons behind it.3.Through the establishment of econometric models and regressionanalysis, section three applies Granger causality test to research therelationship between trading volume and securities brokeragebusiness,the paper concludes that there is highly correlation between thevolume of securities trading brokerage and revenues.4.Section four analyzes the domestic securities brokerage businesscompetition supported by detailed data. This section proposes specificmeasures to the directions of our securities brokerage businesstransformation based on the lessons from the transformation directions ofthe U.S. counterpart.