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Yan Jingyi, a reporter from China Fund News

As the fee reduction of public offering enters a new stage, the seller studiesCryptogamingunitedpriceThe transformation is also in the offing.

On April 19, the Securities Regulatory Commission issued the regulations on the Management of Securities Trading fees for Public offering Securities Investment funds (hereinafter referred to as the "regulations"), which will come into effect on July 1. There are 19 articles in the regulations, which mainly focus on lowering the transaction commission rate, lowering the upper limit of the proportion of transaction commission distribution, strengthening compliance internal control, and clarifying information disclosure.

It goes without saying that after the implementation of the "regulations", the transaction commission will be greatly reduced. After the visible "cake" shrinks, the superimposed supervision further strengthens the internal and external mechanisms, and the seller's previous business model and style of play will also be changed. A number of industry insiders pointed out that the "regulations" will help promote the capacity-building of research services of securities firms and further improve the ecosystem, so as to provide more high-quality trading, research and investment services.

Reduce the transaction commission rate

It is estimated that the annual profit will exceed 6 billion yuan.

The reduction of the fund stock trading commission rate in the "regulations" has the most obvious impact on the total "harvest" of the seller's market. According to the regulations, the commission rate of passive stock funds shall not exceed the average level of the market, and that of other types shall not exceed twice the average level of the market. The average commission rate of stock transactions in the market shall be calculated regularly by the China Securities Association.

In this regard, Huatai Securities non-Bank team said that the first rate reduction will be completed before July 1, 2024, with static data in 2023, investors will save 3.2 billion yuan in 2024 and 6.4 billion yuan in 2025. The CICC non-bank and financial technology team calculated that the transaction commission rate is expected to fall by 40%, corresponding to an annualized profit of more than 6 billion yuan for investors.

The scale of transaction commission was revealed at the end of the 2023 annual report of public offering funds at the end of last month. Tianxiang Investment data show that the transaction commission in the whole market will be 164 in 2023.Cryptogamingunitedprice6.6 billion yuan, 1.775 billion yuan less than in 2022, down nearly 10 percent from the same period last year. If calculated according to the "profit of more than 6 billion yuan" estimated by the organization, the total scale of transaction commission will be reduced to the level of 10 billion yuan.

In addition to large-scale fee reduction, the "regulations" directly refer to the chaos in the industry and require the internal system of public offering funds and securities companies. The "regulations" lower the upper limit of the proportion of securities trading commission distribution from 30% to 15%, so as to further strengthen the supervision of distribution behavior and effectively prevent the transfer of benefits.

At the same time, the regulations strictly prohibit linking the selection of securities companies, the rental of trading units and the distribution of trading commissions with the scale of fund sales and retention, and it is strictly forbidden to promise fund securities trading volume and commission to securities companies in any form or to exchange interests with securities companies by using trading commissions. It is strictly forbidden to use transaction commission to transfer fees to third parties (such as the use of external expert consultation, financial terminals, research and reporting platform, database, etc.).

"this will effectively clean up the chronic diseases of the industry that previously existed in the seller's research, which can be said to have deeply touched the pain point." The head of a large securities research institute in Beijing told reporters that there have been some chaos in the seller's research for a long time, such as the use of means to pull points, sales for commission, excessive "service" and so on. In the past two years, there have been frequent fines for securities research, and related issues have also been paid great attention by regulators. The landing of the "regulations" will help to reshape the image and value of the industry.

After the landing of the "regulations", it means that the second stage of the reform of public offering fees has officially landed. The third stage of regulating fund sales fees and other supporting reform measures are also in steady progress and are expected to be completed by the end of 2024. "in the follow-up, there will be more far-reaching changes in how to sell funds and even the transformation of wealth management of securities firms." The person in charge said.

Zhao ran, chief analyst of Citic Construction Investment non-Bank Financial Industry, believes that the purpose of the "regulations" is to reduce investor costs and promote the industry to get to the root of the problem. This "regulation" continues the fee reform route of "management-transaction sales". In fact, supervision is based on rate adjustment to promote the public offering industry to focus more on "investor-centered" transformation. On the whole, the reduction of transaction commission may reshape the cooperation model between public offering funds and securities firms. In the future, securities firms that return to the source of investment, attach importance to research capacity and system construction, and pay attention to the long-term returns of investors may benefit.

Zhao ran mentioned that in the past, securities research institutes could help fund companies purchase expert consulting services, financial terminals and database services, and the fees generated were still paid by transaction commissions, commonly known as "soft domestic helpers." It is strictly forbidden to transfer fees to a third party, which in fact prohibits the form of payment by "soft domestic helpers". In addition, in the official draft of the regulations, it is also added that the fees entrusted to money brokerage companies are not allowed to be charged from the fund assets, so as to further save costs for investors.

Promote the capacity building of securities research and service

Industry concentration is expected to increase

For all business areas of the securities industry, the "Matthew effect" is very obvious. Among them, seller research can be regarded as a business with a higher degree of marketization and a relatively low degree of industry concentration. Head brokerage research institute strength is strong, but willing to "invest" small and medium-sized securities firms can also rely on the introduction of star analysts to quickly pull up the team.

The chief non-bank of a brokerage in Shanghai told reporters that the public offering commission distribution point was one of the few businesses in the securities industry that could be directly linked to "people". The performance output of a well-known chief after job-hopping can not only "feed" himself and his team members, but also play a role in brand promotion, which is still a cost-effective business for the company. However, under the landing of regulatory policies and changes in the market environment, the seller's business logic will change significantly.

Data from the China Securities Industry Association show that as of April 20 this year, there were 4837 registered securities investment consultants (analysts) in the industry, and the growth momentum continues. However, it can not be ignored that the flow of seller researchers has increased significantly since the beginning of this year, and there are many people who choose to change jobs or even bid farewell to the seller's industry, from the director and deputy director of the research institute to star analysts.

"the flow of personnel is first of all related to strict supervision, industry overcapacity, internal performance appraisal and other factors, and of course it has something to do with the news of a 'pay cut'." The non-bank chief said that although the industry's previously rumored one-size-fits-all pay limit is not common, the general direction will certainly impose certain restrictions on the income of star analysts, and the "cost-effectiveness" of the job has declined. "but generally speaking, it still plays a positive role in the healthy and orderly development of the industry as a whole."

In addition, a person in charge of the research department of the head securities firm said that in recent years, it has adopted a diversified approach to assess analysts, in addition to research reports, dispatching points and other internal quantitative assessment, support for other business lines of the company, undertake government, group, regulatory research projects and other work, will be refined into a part of the analyst assessment. From the original focus on external services to the organic combination of external and internal services.

In addition to the securities research business, the brokerage business will also be affected by the new rules. Liu Yiqian, head of the business of the Shanghai Securities Fund Evaluation and Research Center, pointed out that the decline in the transaction commission rate and the negative impact of distribution restrictions on the future brokerage business of securities firms have become inevitable, especially those securities firms that are highly dependent on commission income will be more difficult in the process of fee reform. Research institutes with commission split positions as the main income will also be affected, among which the impact on small and medium-sized securities firms is the most obvious.

Liu Yiqian believes that with policy guidance, fund companies will select securities companies with strong securities research and report service capabilities as partners in the future. However, the research strength of small and medium-sized securities firms is relatively weak, and in the future, the investment and research support business for public offering funds may be gradually eliminated by the market, and will be transformed into providing research support to more private equity funds, enterprise customers, etc., or provide internal services to achieve "research empowerment". In addition, some research institutes may become business cashing channels for business units in disguise.

At a time of industry change, how should securities companies deal with it? The CICC non-Bank and the financial technology team believe that in the context of the decline in the overall purchasing power of fund companies for external services, securities firms can provide more value to customers through comprehensive services, build a real moat and achieve the growth of their share. On the one hand, securities firms can broaden the breadth and depth of research by expanding coverage of markets, categories, themes and other ways to create differentiated investment and research services. On the other hand, securities firms can cooperate with wealth management, IT and other departments to provide comprehensive financial services for fund companies.

The team said, for example, that the securities settlement model can not only exempt the upper limit of commission distribution, but also pry integrated services such as investment and research, consignment, escrow, settlement, and securities lending, which will help securities firms extend the public offering industry chain and thicken comprehensive service income. In addition, the head brokerage wealth management and seller investment research digitalization is also expected to usher in development opportunities.

Editor: captain

Audit: wooden fish