CSRC Publishes Classification Results for Securities Firms

Source: Regulation Asia Editors, Regulation Asia 2020-08-28

The classification reflects securities firms’ governance structures, risk management capabilities, continuous compliance status, and business development status.

The CSRC (China Securities Regulatory Commission) has published the results of its classification of securities firms for 2020.

Last month, the regulator issued new classification rules, under which compliance and prudential management were emphasised. The new rules also account for specialisation and differentiation in the securities sector, and clarify that securities firms may not use their classification results for commercial purposes.

The results of the classification exercise show that no firm received the highest grade of AAA, though 15 securities firms received AA ratings, more than last year’s 10. Firms rated A increased to 47 from last year’s 38.

The results show that 33 securities firms have upgraded their ratings, while 25 had their ratings downgraded – largely due to risk control deficiencies. Jianghai Securities had the largest decline, down five levels from BBB to C. The firm was recently suspended for six months from conducting bond business due to violations.

Netcom Securities was the lowest rated firm, receiving a D grade, just one notch above the lowest rating. According to Reuters, this was due to the firm’s frequent risk events.

Four firms – Aijian Securities, Donghai Securities, Horizon Securities and Jinyuan Securities – received a CC rating.

Nomura Orient Securities and JPMorgan Chase Securities participated in the rating system for the first time, both receiving a BBB grade.

The CSRC says the classification results are not intended as an evaluation of the securities firms’ credit status, but rather reflects their governance structures, risk management capabilities, continuous compliance status, and business development status.

China Securities Regulatory Commission

Compliance

JPMorgan

risk management

CSRC Publishes Classification Results for Securities Firms

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