Brokers seek support for overseas expansion

Chinese mainland brokers and underwriters have called for regulatory support for their overseas expansion as they seek to become more competitive with leading global investment banks.

After learning from the failure of foreign investment banks during the global financial crisis, Chinese securities companies are ready to set foot abroad, said Yin Ke, head of the International Cooperation Committee of the Securities Association of China.

Yin is also deputy chairman of Citic Securities Co Ltd.

Yin made proposals to the China Securities Regulatory Commission at a two-day meeting where executives from more than 100 companies in the securities industry discussed plans for capital market reform.

"The best way to accelerate the 'going out' strategy of mainland brokers and underwriters is to issue shares in overseas markets, which can force the businesses' managers to improve corporate governance and stimulate convergence with international standards," Yin said on Tuesday.

The most popular way for securities firms to go overseas is to launch subsidiaries or branches in Hong Kong, and then start doing business with foreign players.

According to Haitong Securities Co Ltd, as of the end of last June, 23 securities companies had received permission to set up subsidiaries in Hong Kong, compared with less than 10 companies five years previously.

In addition, 17 of those companies underwrote IPOs in Hong Kong last year, four more than in 2011, and earned 1.02 billion yuan ($159 million) from that business, Haitong said.

However, the Hong Kong underwriting market is still dominated by foreign investment banks which have a market share of more than 70 percent, Haitong said.

"Under the existing legal framework and capital restrictions, it is hard for Chinese securities companies to directly list on overseas exchanges, such as in the United States," Yin said.

Guo Shuqing, chairman of the CSRC, said on Monday that the opening-up of China's securities business will be accelerated and companies in the industry should learn from the experience of commercial banks' overseas expansion.

"Our securities companies should speed up innovation to join the ranks of the world's first-class investment banks," Guo said.

Managers from Guotai & Junan Securities Co Ltd, Southwest Securities Co Ltd and Guosen Securities Co Ltd suggested developing a program that would support residents of Hong Kong, Macao and Taiwan to invest directly in the mainland's A-share market.