Chinese securities brokerage agencies are racing to expand their businesses to the Internet following new regulatory guidelines permitting brokers to open accounts for customers online, a trend indicating that the securities market is becoming more market-oriented, analysts said Thursday.
Securities brokerage agencies can open accounts for inventors online if the customers have valid identity cards and sign relevant agreements, according to a guideline released by the Securities Association of China on March 15.
Ever since the guideline was announced, some securities brokerage agencies, including China Merchants Securities Co and China Securities Co, have launched online systems for opening accounts.
"Allowing securities brokerage agencies to open accounts online indicates the regulator is determined to ease controls on the securities market," Li Daxiao, director of research with Shenzhen-based Yingda Securities Co, told the Global Times Wednesday.
Li said doing business online could save operating costs for the agencies.
With e-commerce expanding quickly in China, brokers have also started conducting more types of business on the Internet, such as selling financing products.
Founder Securities Co on March 13 opened an online store on tmall.com to sell financing products ranging in price from 26.5 yuan ($4.3) to 15,980 yuan.
Customers welcomed their new ability to open accounts conveniently online.
"I can choose any securities brokerage agency that has a good reputation, rather than considering whether the agency has a branch close to my home," Jia Ningfang, a 29-year-old white-collar worker in Beijing, told the Global Times Thursday.
But some brokers expressed concern that they may face stiffer competition amid the sluggish performance of the capital market.
It's possible that agencies will compete to reduce brokerage fees so as to attract customers, "which will cause a decline in the brokers' revenue, a big challenge for us," a staff member at one of the country's leading securities brokerage agencies, who requested anonymity, told the Global Times Thursday.
He said some of his colleagues, who used to be responsible for services like opening accounts at brokerage houses, have already been transferred to the sales department.
The securities brokerage business is becoming more market-oriented and fiercely competitive now that the capital market is slowing down, rather than relying heavily on government supports or bailouts, he said.
China's securities brokerage agencies were dragged to a slowdown last year by the poor performance of the capital market, with the benchmark Shanghai Composite Index hitting a five-year low last November, when it fell below 2,000 points.
Some brokerage agencies have laid off up to 50 percent of their staff members so as to reduce labor costs, media reported at the end of 2012.