Core Viewpoint - The recent revision of the "Securities Company Classification Evaluation Regulations" aims to optimize the classification evaluation system, emphasizing functional orientation and promoting differentiated development for small and medium-sized securities firms, aligning with the new "National Nine Articles" and the financial "Five Major Articles" requirements [1] Group 1: Functional Orientation - The revised regulations prioritize guiding securities companies to better fulfill their functional roles and enhance professional capabilities, incorporating the evaluation of "functional performance" into the existing framework [2][3] - The new evaluation framework shifts from a traditional focus on "risk management + compliance + business development" to a new system that includes "risk management capability + ongoing compliance + business development and functional performance" [3] Group 2: Differentiated Development - The regulations eliminate the revenue-based bonus points, reducing repetitive scale-based incentives, while increasing the emphasis on return on equity (ROE) to encourage firms to focus on operational efficiency rather than mere scale expansion [5][6] - The adjustment allows for a broader range of firms to benefit from the evaluation, encouraging small and medium-sized firms to explore differentiated paths based on their resource endowments [5][6] Group 3: Encouraging Long-term Investment - The revision introduces new indicators related to self-operated equity investments, fund advisory development, and management scale of equity-related products, aiming to optimize investment structures and enhance services for long-term capital entry into the market [7] Group 4: Enhanced Regulatory Measures - The revised regulations strengthen the punitive measures and risk mitigation strategies, expanding the scope for rating downgrades due to significant violations and enhancing the penalty mechanisms for misconduct [8][9] - The introduction of a self-rescue incentive mechanism allows for reduced penalties for firms that proactively correct issues, promoting accountability and investor protection [9]

Core Viewpoint - The China Securities Regulatory Commission (CSRC) is revising the classification evaluation rules for securities companies to enhance the effectiveness of the evaluation system, encouraging differentiated development and specialized operations among smaller institutions [2]. Summary by Sections Evaluation System Revision - The CSRC aims to optimize and integrate scale indicators, increasing the coverage of certain bonus indicators and enhancing the scoring for return on net assets [2]. - The evaluation will now include specific indicators for proprietary investment in equity assets and the scale of equity fund sales, guiding securities firms to attract long-term capital and improve investor service capabilities [2]. Regulatory Measures - The revision introduces stricter penalties for serious misconduct, increasing the deduction points for disciplinary actions, which aligns with other deduction items to maintain overall balance [2]. - A comprehensive accountability system is being established, incorporating self-regulatory measures, administrative supervision, and penalties to effectively combat illegal activities in the securities market [2]. Industry Response - The increasingly stringent regulatory environment is pushing the industry to strengthen internal controls and compliance management [3]. - Securities companies are encouraged to align their business philosophies and enhance professional capabilities to meet diverse investor needs, ensuring favorable evaluation outcomes [3].