[ET Net News Agency, 30 June 2020] Caixin on 27 June reported that the CSRC plans to
select at least two major commercial banks to set up broker subsidiaries as a pilot
program.
Goldman Sachs expects a significant escalation of competition in the brokerage sector
brought on by banks, given their unparalleled capital size and client base compared to
traditional brokers.
More specifically, the research house believes the retail brokerage and FICC-related
(Fixed Income, Currency & Commodity) business could encounter more intensive competition
from banks as there are clearer areas of potential synergies with banks' existing
business, which could accelerate broker sector divergence versus the traditional brokerage
business.
Goldman believes that brokers with higher exposure to equity derivative, ECM (equity
capital market) and HNW (high-net-worth) wealth management business, like CICC (03908) and
CITIC Securities (06030), would be less impacted by the proposed policy reform. (KL)