China Securities and seven other brokerages become first market makers for Star Market

(Yicai Global) Sept. 19 — Eight brokers, including China Securities, have received regulatory approval to become the first batch of market makers for the Shanghai Stock Exchange’s Nasdaq-style Star Market.

According to a notice issued by China Securities and Regulatory Commission posted on its website on September 16.

The National Equities Exchange and Quotations, commonly referred to as the new third council, introduced the mechanism of market makers in August 2014. China’s securities regulator said it would pilot market making on Star Market in January.

Star Market will gradually transform into a hybrid transaction mechanism from the existing price auction transaction after the introduction of market makers, Yicai Global learned from the brokerage houses. Market makers will provide the market with sustained liquidity, increase price efficiency and reduce price swings caused by speculation, they said.

The market making business will become a new source of profit for brokerage firms as it can grow in coordination with existing investment banking and research and advisory businesses to provide more comprehensive services to customers and increase the core competitiveness of brokerage houses, Orient Securities pointed out.

To become market makers for Star Market, brokerages need a net capital of at least CNY 10 billion (USD 1.4 billion) in the past 12 months and a rating above A in during each of the last three years. China’s leading brokerage firm Citic Securities and others have disclosed plans to apply to conduct market-making activities for Star Market earlier, Yicai Global has learned.

Star Market started operations in July 2019. It was the first market in the Chinese mainland to pilot the registration-based IPO system, allow loss-making technology companies and those to be listed. with special capital structures, and to expand the imposed daily exchange. limit to 20% compared to 10% on the main card market.

The 463 companies listed on Star Market had a total market capitalization of nearly 5.8 trillion yuan ($832.9 billion) as of September 16, according to SSE data.

Editors: Dou Shicong, Futura Costaglione