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China’s ‘broker butcher’ regulator to lead effort to nurture mainland competitors for Morgan Stanley, Goldman Sachs
- The CSRC under Wu Qing will aim to develop 10 first-class brokerages, including two or three that can compete with top global names by 2035
- To do so, the CSRC may relax capital requirements for brokerages, enhancing their return-on-equity ratio and their valuations, HSBC says
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Zhang Shidongin Shanghai
China’s new top stock regulator Wu Qing, known as the “broker butcher”, will be responsible for nurturing 10 first-class brokerages including two or three that can compete with top global names such as Goldman Sachs and Morgan Stanley by 2035.
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The ambition was revealed in one of four documents promulgated on Friday by the China Securities Regulatory Commission (CSRC) as a blueprint for the high-quality development of capital markets. A lack of top-tier brokerages is seen as a hindrance to the evolution of China’s US$9.4 trillion stock market.
Wu, installed as CSRC chairman last month, earned his tough reputation for clamping down on stock manipulation when he helmed the Shanghai Stock Exchange from 2016 to 2017. Appointed as the point person to defuse industry risk after a four-year bear market in 2005, he forced into liquidation more than 20 brokerage firms for seizing client funds for proprietary stock investments.
Now he faces an uphill battle to reshape China’s 11 trillion yuan (US$1.5 trillion) securities industry as a prescription for reversing a three-year market slump and reviving confidence among the country’s 220 million individual investors.
To achieve the brokerage goal, the document outlines 25 guideline points, running the gamut from corporate governance and risk control to staff management and the responsibility for maintaining market stabilisation.
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