Chinese Securities Companies An Analysis of Economic Growth, Financial Structure Transformation, and Future Development

Core Points of View xi

Preface xiii

Acknowledgments xv

Introduction

Economic Growth, Financial Restructuring, and Prospects of Securities Companies 1

Understanding the Economic Trends of China from a Securities Firm’s Perspective 1

The Evolution of Chinese Financial Structure in the Future 11

Core Competitive Edge 18

References 21

CHAPTER 1 Review and Judgment of Historical Roles of Chinese Securities Companies 23

The Birth and Growth of Chinese Securities Companies—A Brief History 25

Review of the Pros and Cons of Chinese Securities Companies 43

Historic Contributions of Chinese Securities Firms 46

Case Studies: Typical Chinese Securities Firms 72

References 93

CHAPTER 2 Analysis of Functions of Chinese Securities Companies 95

Theoretical Analysis of Financial Functionality 96

Functional Orientation for Securities Firms 101

Change of the Chinese Depository System for Security Deposits and How Chinese Securities Firms Function 113

Institutional Change and Functional Evolution for Chinese Securities Firms—An Analysis with Particular

Interest in the Function of an Underwriter’s Goodwill 120

References 140

CHAPTER 3 Analysis of the Management Model of Chinese Securities Companies 143

Introduction 144

Organization and Management in Investment Banks: A General Analysis Based on Institutional Banking and Functional Banking 146

Organization and Management in Chinese Securities Firms: A Historical and Theoretical Review 156

Selection of Models (Goals) for Change of Organization and Management in Chinese Securities Firms 169

Some Ideas of Overall Policy for Future Organizational and Management Transformation in Chinese Securities Firms 191

References 201

CHAPTER 4 Analysis of the Profi t Model of Chinese Securities Companies 203

Theoretical Analysis of Profi tability Models 204

Profitability Structures of Chinese Securities Companies 210

Profit Methods of the Main Business of Securities Companies 218

Characteristics of the Profitability Model of Securities Companies 234

Construction of New Profitability Models 237

Case Studies 253

References 264

CHAPTER 5 Analysis of Risk Management in Chinese Securities Companies 267

Status Quo and Trend Analysis of Risk Management in Securities Companies 268

Management of Risks Associated with Traditional Business of Chinese Securities Companies 286

Management of Risks Associated with Innovative Business of Securities Companies 307

References 316

CHAPTER 6 Analysis on Structure and Competitiveness of Talent in Chinese Securities Companies 317

Development Trend and Core Competitive Strength in the Securities Industry 317

Demand for Talents in the Development of the Securities Industry 321

Comparative Advantages and Disadvantages of Wealth Management Talent in the Securities Industry 328

Effective Talent Management in Securities Companies 339

References 347

CHAPTER 7 Analysis of Sponsor Regime for Chinese Securities Companies 349

Origin and Development of the Sponsor Regime in China 349

Analysis of Punishments Imposed by the CSRC on Rule-Breaching Sponsors 359

Rule Breaking Sponsor—Case Studies 378

Intrinsic Flaw of the Sponsor System: Imbalance between Profi t and Risk 386

Direction for Sponsor System Reform 390

References 394

CHAPTER 8 Experience and Lessons from International Investment Banks (Securities Companies) in Mature Markets 397

Overview of the Development History of Investment Banks in the Mature Overseas Market 397

Analysis of Investment Bank Regulation in Mature Overseas Markets 410

Analysis of the Organizational Structures of Investment Banks in Mature International Markets 416

Analysis of Business Structures of Investment Banks in Mature International Markets 435

Analysis of the Internal Control of Investment Banks in Mature International Markets 448

What China Can Learn from the Development of Investment Banks in Mature International Markets 467

References 476

CHAPTER 9 Future Development and Reform Focuses of Chinese Securities Companies—General Principle 479

Some Directions for the Future Development of Chinese Securities Firms 480

Some Priorities of Future Reform in Chinese Securities Firms 496

References 510

About the Author 513

Index 515

WU XIAOQIU is renowned as an expert on Chinese finance and securities and is one of the most influential authorities on the field of capital markets in China's economic circle. He holds several positions at the Finance and Securities Institute of Renmin University of China, including Director and Professor of Finance. Professor Wu is also a member of the ninth Issuance Examination Committee of the China Securities Regulatory Commission. His research focuses on macroeconomics, financial reform, and capital markets.