Recently, the China Securities Regulatory Commission approved Shenwan Hongyuan Securities, Huatai Securities, Galaxy Securities, China Securities Construction Investment Securities, Orient Securities, Caitong Securities, Guosen Securities, and Guojin Securities as market makers on the Sci-tech Innovation Board.
Experts believe that since the opening of the STAR Market, the market has been running smoothly. The current introduction of the market maker mechanism is conducive to further improving the liquidity of stocks in the sector and enhancing market resilience, and by steadily advancing reforms, it will help to explore experience for future replication to the stock sector. , thereby promoting the healthy and long-term development of the capital market.
Better promote plate construction
The market maker mechanism of the Sci-tech Innovation Board is an important measure to continuously improve the basic system of the capital market and further play the role of the "experimental field" for the reform of the Sci-tech Innovation Board. This system has been launched for a long time.
As early as 2014, the market maker system of the New Third Board was introduced and implemented, and the rights and obligations, assessment system, incentive mechanism and various types of market maker systems of market makers were explored, which accumulated for the smooth implementation of the market maker system on the Science and Technology Innovation Board. experience.
"Judging from the comparison of the trend of the third board market making index and the third board component index since 2020, the market maker system has given higher liquidity, enhanced the market's ability to allocate resources, and helped to better play the market financing function and The price discovery function promotes the healthy development of the capital market." said Liu Xinqi, chief analyst of Guotai Junan Non-Bank Financial.
The introduction of the market maker mechanism is an important measure to promote the construction of the Science and Technology Innovation Board.
Since the opening of the market in July 2019, the Science and Technology Innovation Board has been operating stably for more than three years. It has coordinated and promoted the reform of basic systems such as issuance, listing, information disclosure, trading, and delisting, and has steadily piloted the registration system. Various institutional arrangements have withstood The market inspection has created favorable conditions for the pilot market makers.
"The Science and Technology Innovation Board is the 'experimental field' for capital market reform. The introduction of the market maker mechanism on a pilot basis is conducive to accumulating experience, steadily advancing the reform, and gradually replicating it to the main board, ChiNext and other stock sectors, and even extending it to the futures market, so as to connect smoothly and comprehensively. The implementation of the registration system." Liu Xinqi said.
Since the beginning of this year, the work of market makers on the Science and Technology Innovation Board has been in full swing.
On May 13, the China Securities Regulatory Commission issued the "Regulations on the Pilot Program of Stock Market Making and Trading Business on the Science and Technology Innovation Board of Securities Companies", which clearly include market maker access conditions and procedures, internal control, risk monitoring and monitoring, and regulatory enforcement.
On July 15, the Shanghai Stock Exchange issued the "Detailed Rules for the Implementation of the Stock Market Making and Trading Business of the Shanghai Stock Exchange's Science and Technology Innovation Board" and the "Shanghai Stock Exchange Securities Trading Business Guide No. 8 - Market Making of the Science and Technology Innovation Board Stocks", clarifying the market making services. In terms of application and termination, the rights and obligations of market makers, and the supervision and management of market makers, more specific and detailed trading and regulatory arrangements have been made for the market-making trading business on the Sci-Tech Innovation Board.
According to the above regulations, the securities companies that can participate in the first batch of pilot projects must meet the conditions of continuous net capital of not less than 10 billion yuan in the last 12 months, and the classification rating of the last three years at Class A (inclusive).
Previously, a number of securities firms disclosed that they would apply for the first batch of market makers on the Sci-Tech Innovation Board, but only eight of the first batch of securities firms were approved. ".
"Compared with the market-making on the New Third Board dominated by small and medium-sized securities firms, the market-making on the Sci-Tech Innovation Board has set a higher threshold for participation." Tian Liang, chief analyst of the financial industry of CITIC Securities, said that the market maker system encourages sponsors with pilot qualifications Institutions provide market-making services, which are expected to enhance the business stickiness of leading securities companies and companies listed on the Science and Technology Innovation Board, establish a complete service chain across the primary and secondary markets, and further increase the market share of leading securities companies.
"From the point of view of the entry list, there are both leading securities companies and small and medium-sized securities companies in the first list." Liu Li, a non-bank financial analyst at Shanxi Securities, believes that the announcement of the list marks a further step in the implementation of the market maker system, which is conducive to technology The process of listing and financing of innovative companies on the STAR Market will also help the refinancing of listed companies, which will further enhance the liquidity of STAR Market stocks, enhance market resilience, improve market confidence, and promote the high-quality development of the STAR Market.
Improve market liquidity
Previously, there were many voices of concern, whether market makers would have a negative impact on the market?
In this regard, CITIC Securities denied.
First of all, the qualifications of market makers are very strict, and they need to meet a series of requirements of the China Securities Regulatory Commission and various strict inspections and tests of the exchanges. These securities companies are the best in the domestic market making business, and have very strict compliance and risk control systems. , the internal control system and trading system are not allowed to manipulate the market.
Secondly, on the premise that market makers can borrow securities, they will adopt a market-neutral strategy, which will basically maintain the balance of buying and selling within the day. Market makers' transactions have no impact on the long-term trend of stock prices.
"Market makers help to stabilize market prices and enhance market resilience." Guosen Securities said that when the market fluctuates, market makers have the responsibility to continuously quote prices to prevent excessive speculation.
Market makers generally have better valuation analysis and value judgment capabilities, and higher risk tolerance, which is more conducive to maintaining market prices near a reasonable level and maintaining market stability.
Especially when the market fluctuates greatly, market makers act as the last bidder based on market making obligations, improving the continuity of quotations at critical moments, thereby sending valuable price reference information to the market and helping the market stabilize and rebound.
Moreover, the lower the stock liquidity, the greater the impact of individual investors’ trading behavior on the price trend. The addition of market makers improves the overall liquidity level and reduces the influence of a single investor on the market, which is conducive to market equilibrium and Stablize.
According to statistics from Flush iFinD, as of the close of trading on September 28, 2022, the number of companies listed on the Science and Technology Innovation Board has reached 480, with a total market value of about 6 trillion yuan.
Experts believe that the degree of active trading of stocks on the Science and Technology Innovation Board varies, and the introduction of market makers will help improve market liquidity.
"The market maker mechanism will stimulate trading activity." Liu Xinqi said that market makers can directly trade with buyers and sellers with their own securities, better match the supply and demand of securities, and effectively avoid the traditional auction trading model. The accumulation of transaction volume and the delay in the transaction process will drive the activity of the entire market.
Xia Changsheng, chief non-bank analyst at Tianfeng Securities, said that from overseas experience, the market maker mechanism is a powerful supplement to auction trading, which can improve market liquidity, promote price discovery and stabilize the market.
At present, there are obvious stratifications in the liquidity of the Science and Technology Innovation Board. Since the beginning of this year, 64% of the stocks on the Science and Technology Innovation Board have not reached the average daily turnover rate of all A shares, which may weaken the plate's influence on the development and growth of science and technology enterprises. Financing support and the introduction of a market maker mechanism will help further enhance the liquidity of STAR Market stocks, enhance market resilience, and promote the long-term and healthy development of the STAR Market.
For small and medium investors, it will also bring benefits.
Huatai Securities said that in markets without a market maker system, securities prices often overreact due to the "herd effect" of investors, and market makers' advantages in capital, systems, personnel, etc. can stabilize the market to the greatest extent. Rational Fluctuations".
"Through professional market-making bilateral quotation and inventory management capabilities, market makers can effectively reduce the impact cost of market transactions while better controlling their own risks, and bring a better investment experience to the majority of small and medium investors." CITIC Construction Investment said.
In general, the market maker system on the Sci-Tech Innovation Board helps to improve market efficiency and improve the functions of the capital market.
Wang Weiyi, chief analyst of the financial and financial technology industry of Ping An Securities Research Institute, said that since the beginning of this year, regulators have repeatedly mentioned the comprehensive registration system reform, and the reform of the capital market financing side has been deepened. , the two ends make efforts to jointly improve the functions of the capital market.
Enhance the competitiveness of securities companies
According to the requirements of the China Securities Regulatory Commission, the first batch of 8 securities companies should complete the industrial and commercial change registration within 6 months from the date of issuance of the approval reply.
At present, relevant securities companies have actively carried out preparatory work.
Galaxy Securities stated that the company will revise the company's articles of association in strict accordance with relevant regulations and approval requirements, go through relevant regulatory filing, industrial and commercial change registration procedures, and apply for the renewal of the securities and futures business license; Preparatory work should be done in terms of venues and other aspects; strengthen information technology security management, conscientiously do a good job in risk prevention, and effectively ensure the smooth development of this business.
In addition to the 8 approved securities companies, Dongxing Securities, Founder Securities, Zheshang Securities and other securities companies have also publicly stated that they intend to apply for the market-making business of stocks on the Science and Technology Innovation Board, and actively strive for the qualification of market makers on the Science and Technology Innovation Board.
What are the advantages of securities firms obtaining market maker qualifications on the Science and Technology Innovation Board?
"For securities companies, by actively joining the ranks of market makers, continuously improving their professional capabilities, changing the traditional business model of the past, and integrating the advantages of 'capital + investment research + trading', the profit model can be optimized and enriched. The source of profit, the securities industry will also usher in high-quality and sustainable development opportunities." Caitong Securities said.
The market maker system also helps to enhance the performance of securities firms.
Luo Zhanhui, chief analyst of the non-banking industry of Western Securities, said that factors such as securities sources and capital funds affect the market-making business layout of various securities companies.
From the beginning of the year to the present, the self-operated investment business of securities companies has been greatly affected by market fluctuations, resulting in a significant differentiation in the performance of various securities companies. Compared with the traditional self-operated investment business, the performance of the market-making business is more stable and certain, and it is expected to become the The main direction of the investment of securities companies in the next stage.
"In the long run, the market maker system on the Sci-tech Innovation Board will effectively revitalize the self-operated assets of securities firms, increase performance and improve performance stability." Xia Changsheng analyzed that, first of all, securities firms can use their own stocks for market making on the Sci-tech Innovation Board. It will effectively revitalize the company's self-operated positions and passive positions brought by co-investment on the Science and Technology Innovation Board.
Secondly, market makers use the bid-ask spread as their main source of income, and do not rely on unilateral market conditions. The income is more related to the market size. Compared with traditional self-operation, the investment performance is more stable and certain. hand.
In addition, the market-making business of securities companies can be coordinated with corporate research, investment banking, OTC derivatives and other businesses, which will help improve the comprehensive financial service capabilities of securities companies.
At the same time, the approval of the market maker qualification also means that the capital pressure of securities companies has further increased.
Tian Liang said that securities companies participating in the market-making business of the Science and Technology Innovation Board will assume the responsibility of improving market liquidity, thus increasing their own capital pressure.
At present, the price-to-book ratio of top securities companies is generally about 1 times. Under the constraints of strong net capital regulatory indicators represented by the net stable capital ratio, the equity financing channels and debt financing channels of securities companies may be affected, which may limit their business development and development. level of shareholder return.
Therefore, it is worth looking forward to whether the regulatory authorities can relax the net capital constraint indicators and further enhance the vitality of the capital market in the future.
It is foreseeable that with the continuous advancement of the registration system reform, the number of stocks listed on the Science and Technology Innovation Board will increase in the future, and the variety of securities companies' market-making business will continue to expand.
The Shanghai Stock Exchange said that at present, the market-making trading business technology system, business filing, supervision and management of the Shanghai Stock Exchange are all ready.
In the next step, according to the application of qualified securities companies, the filing of specific stocks on the STAR Market will be completed, and the market-making and trading business of STAR Market stocks will be launched steadily, and the market maker mechanism on the STAR Market will be fully ensured. The role of "experimental field" for the reform of the board is to promote the high-quality development of the Sci-tech Innovation Board in an all-round way.
Li Hualin