China's securities regulator is planning to introduce a raft of reform measures to transform the brokerage sector, with an aim to create globally competitive investment banks, a regulatory document showed.
Following are some of the proposed reform measures.
* Encourage brokerages to form financial groups and allow them to take control of mutual fund companies and expand alternative investment businesses.
* Lower the threshold for brokerages' wealth management products for an individual investor to 50,000 yuan ($7,900) from 100,000 yuan.
* Simplify the approval procedure for brokerages' wealth management products, and give such products access to the futures market and the interbank market.
* Gradually expand the investment scope of brokerages' propriety trading, eventually including all types of financial products traded on and off stock exchanges, such as commodities futures and spot gold.
* Allow brokerages to distribute more types of financial products.
* Accelerate drafting rules that would allow overseas companies to issue stocks and bonds in China.
* Scrap rules that disqualify certain brokerages from listing and accelerate IPO approvals for brokerages.
* Encourage mergers and acquisitions in the sector.
* Raise the leverage ratio for brokerages, with the net asset to debt ratio cut to 10 percent from 20 percent, for a doubling of the leverage ratio to 10 times from 5 times.
* Allow brokerages to set aside smaller provisions for certain businesses. For propriety trading, in equities the ratio would be lowered to 15 percent from 20 percent, while for fixed income it would be lowered to 8 percent from 10 percent. ($1 = 6.3231 Chinese yuan) (Reporting by Samuel Shen and Kazunori Takada in Shanghai; Editing by Edmund Klamann)
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