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Source: China Fund Daily

China Fund Daily Morning Dawn

Another head brokerage has suffered a regulatory ticket!

According to the official website of the CSRC on May 10, due to various violations in the asset management business, the Beijing Securities Regulatory Bureau took administrative regulatory measures to order China International Capital Corporation to correct, and the then investment manager and senior executives in charge of the asset management business were also issued warning letters.

The Beijing Securities Regulatory Bureau requires that China International Capital Corporation attach great importance to it, take effective measures to actively rectify and reform, strengthen compliance risk control, and improve the level of compliance operation of the asset management business.

There are many problems in asset management business.

China International Capital Corporation was ordered to correct

First of all, the Beijing Securities Regulatory Bureau pointed out China International Capital Corporation's violations:

After investigation, when China International Capital Corporation carried out asset management business, there were some problems, such as liquidity gap caused by operational risks, illegal provision of channel services, unspecified decision-making basis for reverse trading on the same day, mutual transactions between product accounts, and so on.

According to the measures for the Management of Private assets Management of Securities and Futures operating institutions, securities and futures operating institutions shall abide by prudent business rules, formulate scientific and reasonable investment strategies and risk management systems, effectively prevent and control risks, and ensure that business development is commensurate with capital strength, management ability and risk control level.

At the same time, the Management measures require that if the asset management plan invests in other asset management products, it shall be clearly stipulated that the asset management products invested will no longer invest in asset management products other than public offering funds. Securities and futures operating institutions shall earnestly perform their duties of active management and shall not provide access services for other institutions, individuals or asset management products to evade regulatory requirements such as investment scope and leverage constraints.

Securities and futures operating institutions shall monitor and control the co-directional trading and reverse trading between different asset management plans, and clearly define the types of anomalies and their disposal arrangements. The same asset management plan shall not conduct reverse trading on the same trading day. Transactions shall not take place between proprietary accounts, asset management plan accounts, product accounts managed as investment advisers, and between different asset management plan accounts (except where there is sufficient evidence of effective isolation and fair prices).

In the end, the Beijing Securities Regulatory Bureau decided to take supervision and management measures to order China International Capital Corporation to correct. The Beijing Securities Regulatory Bureau requires that China International Capital Corporation attach great importance to it, take effective measures to actively rectify and reform, strengthen compliance risk control, and improve the level of compliance operation of the asset management business. China International Capital Corporation shall, within 30 days from the date of receipt of the decision, submit a written rectification report to the Beijing Securities Regulatory Bureau.

In addition, with regard to the problem of illegal provision of channel services in China International Capital Corporation's asset management business, the Beijing Securities Regulatory Bureau believed that Yu Jian, the then investment manager, and Xu Yicheng, the senior manager in charge of the asset management business at that time, were responsible and took supervision and management measures to issue warning letters to both of them.

The scale of asset management business exceeds 550 billion yuan.

Application for asset management subsidiary is under way

As a leading securities firm in the industry, China International Capital Corporation's asset management business has been in the forefront of the industry for a long time. According to the 2023 annual report, as of the end of 2023, the business scale of China International Capital Corporation Asset Management Department was 5525.Rollettocasinonodepositbonus71 million yuan. In terms of product category, the management scale of collective asset management plan and single asset management plan (including social security, enterprise annuity, occupational annuity and pension) is 138.842 billion yuan and 413.729 billion yuan respectively.

In the business measures of that year, China International Capital Corporation said that in 2023 the company had always adhered to forging long plates to make up for deficiencies, consolidate investment and research construction, strengthen risk control compliance, and strengthen personnel management, guided by the high-quality development of asset management business, build a competitive advantage for differentiated development, and pay close attention to the business layout around the concept of "financial service entity".

On April 26th, the China Foundation Association released data on the average monthly scale of each asset management business in the first quarter of 2024, showing that China International Capital Corporation's private asset management products had an average monthly size of 233.536 billion yuan, ranking sixth in the industry.

By comparison, the average monthly size of China International Capital Corporation's private equity asset management products was 704.566 billion yuan in the first quarter of 2022 and 336.306 billion yuan in the first quarter of 2023. It is not difficult to find that the scale reduction of China International Capital Corporation's private equity management products is quite obvious in recent years.

In addition, in March 2021, China International Capital Corporation announced that he planned to set up an asset management subsidiary and apply for a public offering license, with an initial registered capital of 1 billion yuan. Since then, the CSRC gave feedback on China International Capital Corporation's establishment of an asset management subsidiary twice in June 2022 and March 2023. So far, there has been no more progress in setting up an asset management subsidiary by China International Capital Corporation.

In terms of performance, in the first quarter of 2024, China International Capital Corporation achieved 3.874 billion yuan in operating income, down 37.61 percent from the same period last year, and the net profit returned to her mother was 1.239 billion yuan, down 45.13 percent from the same period last year. Among them, China International Capital Corporation's net income from asset management fees was 268 million yuan, down about 18% from the same period last year.

Recently, China International Capital Corporation has been subjected to regulatory "roll call" one after another. China International Capital Corporation was ordered by the Beijing Securities Regulatory Bureau to take administrative supervision measures to increase the number of compliance inspections. After investigation, China International Capital Corporation has some situations, such as transactions between self-management and investment accounts, inadequate management of conflicts of interest, imprudent development of over-the-counter options, inadequate management of subsidiary business and investment behavior, and non-standard corporate governance. it reflects that the company has failed to implement compliance management effectively and its internal control is not perfect.

On April 24th, Beijing Securities Regulatory Bureau issued a warning letter to China International Capital Corporation. According to the investigation, there are two problems in China International Capital Corporation's compliance management: one is to hire people who are not qualified to carry out relevant securities business; the other is that many employees have bought and sold stocks and lent personal securities accounts. The company does not monitor and monitor the behavior of employees.

As of May 10, China International Capital Corporation's share price was 34.21 yuan per share, up 1.69% on the day, with a total market capitalization of 165.14 billion yuan.