Core Points - The China Securities Regulatory Commission (CSRC) has revised and officially implemented the "Securities Company Classification Evaluation Regulations" as of August 22, 2025, with self-assessment work already completed by brokerages [1] - The evaluation results are expected to be announced by the end of September or early October [1] Group 1: Key Changes in Regulations - Change 1: Adjustment of the deduction rules, with a broader coverage. Brokerages can reduce their deduction by up to 1 point if they actively apply for administrative enforcement commitments or conduct advance compensation [2] - Change 2: Emphasis on "cracking down on major violations," with stricter regulations. Brokerages involved in severe violations such as misappropriation of client assets or false financial information may be directly downgraded to a D rating [3] - Change 3: Focus on functional roles while downplaying purely operational indicators. The new regulations emphasize that brokerages should not only focus on profitability but also serve national strategies and the real economy [4] - Change 4: Support for differentiated development of small and medium-sized brokerages. The regulations remove the revenue ranking bonus for total operating income and expand the bonus range for brokerage, investment banking, and asset management income from the top 20 to the top 30 [5]

Core Viewpoint - The A-share market is experiencing increased trading enthusiasm and activity, with a notable rise in margin financing balances, supported by favorable policies for the brokerage sector [1][2]. Group 1: Market Performance - As of August 29, 2025, the Guozheng Securities Leading Index (399437) rose by 0.71%, with constituent stocks such as Guolian Minsheng (601456) up by 2.95% and CITIC Securities (601066) up by 2.26% [1]. - The Securities ETF Leader (159993) increased by 0.63%, with the latest price reported at 1.43 yuan [1]. Group 2: Regulatory Changes - The recent regulatory changes by the CSRC aim to enhance the functional role of securities companies, encouraging them to improve operational quality and better serve in areas like long-term capital introduction and wealth management [2]. - The new regulations reduce total score indicators while increasing the emphasis on ROE, expanding the coverage for brokerage, investment banking, and asset management [2]. - The regulations promote a "扶优限劣" (support the strong and limit the weak) approach, allowing small and medium-sized brokerages to explore differentiated and specialized development paths [2]. Group 3: Index Composition - As of July 31, 2025, the top ten weighted stocks in the Guozheng Securities Leading Index (399437) include CITIC Securities (600030) and Dongfang Caifu (300059), collectively accounting for 78.84% of the index [3].

Core Viewpoint - The new regulations aim to enhance the classification and evaluation system for securities companies, promoting high-quality development in the industry and supporting differentiated growth for small and medium-sized firms [1][2]. Group 1: Regulatory Changes - The new regulations, officially titled "Securities Company Classification Evaluation Regulations," were released by the China Securities Regulatory Commission on August 22, 2023, and will take effect immediately [1]. - This marks the fourth revision since the original regulations were implemented in 2009, with adjustments made in 2010, 2017, and 2020 [2]. Group 2: Evaluation Criteria - The core logic of the new regulations is to evaluate securities companies based on their risk management capabilities and compliance status, alongside their business development and functional performance [2]. - The new regulations introduce an assessment of "functional performance," which was not included in the previous version, and authorize the China Securities Association to conduct specialized evaluations [2]. Group 3: Encouragement for Development - The new regulations eliminate the "operating income" bonus item and increase the value and coverage of the "return on net assets" bonus, guiding the industry towards a quality-focused development direction [3]. - The regulations expand the coverage for bonuses related to "agency trading," "sponsorship and underwriting," and "asset management," providing more opportunities for small and medium-sized firms to earn bonuses [3]. - New bonus indicators for proprietary investment in equity assets and wealth management are introduced to encourage securities companies to enhance their capabilities in serving the real economy and investors [3]. Group 4: Penalties for Violations - The new regulations increase the number of penalty items related to administrative punishments and disciplinary actions, emphasizing a regulatory approach that targets serious violations [4]. - The penalties are adjusted to maintain a balance between deductions and bonuses, with the maximum deduction for severe violations reduced from 10 points to 8 points [4].

Core Insights - The report highlights the implementation of the revised classification and evaluation regulations for securities companies, effective from August 22, 2025, which aims to enhance regulatory efficiency and reduce industry burdens while promoting differentiated development among firms [1][2]. - The new regulations emphasize the importance of functionality and compliance, shifting the competitive focus from capital scale to professional capabilities and functional realization, benefiting leading firms while requiring smaller firms to invest in differentiation [2][3]. Summary by Sections Regulatory Changes - The revised regulations focus on promoting the functionality of securities companies, optimizing business development indicators, and enhancing the evaluation framework to support high-quality development [2]. - The new framework introduces special indicators that increase the weight of net asset return, guiding the industry towards efficiency rather than mere scale expansion [2][3]. Market Impact - The overall market impact of the new regulations is viewed as neutral to positive, potentially stabilizing profitability and valuation elasticity within the brokerage sector [2][3]. - The report anticipates a valuation recovery for brokerage firms in the short term, driven by improved market sentiment, while in the long term, it expects a dual pattern of valuation uplift for leading firms and recovery for differentiated smaller firms [1][2].

Core Viewpoint - The China Securities Regulatory Commission (CSRC) has revised the classification evaluation regulations for securities companies to promote high-quality development and enhance the functionality of these firms [1][2]. Group 1: Regulatory Changes - The new regulations emphasize the need for securities companies to better fulfill their roles and enhance their professional capabilities [2][3]. - The evaluation framework has been adjusted to focus on risk management, compliance status, business development, and functional performance [2][3]. - A new special evaluation for "functional performance" will be organized by the Securities Association, with results incorporated into the classification evaluation [3]. Group 2: Support for Small and Medium Institutions - The regulations support differentiated development and specialized operations for small and medium-sized institutions [4][5]. - The new rules increase the scoring for net asset return, encouraging securities companies to adopt a capital-intensive development approach and improve operational efficiency [5]. - The scoring coverage for major business income has been expanded from the top 20 to the top 30 firms, allowing smaller institutions to explore differentiated development paths [5]. Group 3: Strengthening Punitive Measures - The new regulations enhance comprehensive penalties for serious violations, aligning with the "strike hard against major offenders" directive [6][7]. - Companies with significant violations may face direct downgrades in their evaluation results, with a focus on substantial assessments [7]. - The regulations aim to effectively utilize various regulatory measures to combat illegal activities in the securities market and protect the rights of small investors [7].