SAC Releases CSR Report of Securities Firms 2022

Financials Author: Muriel Meng Editor: Mingmin Zhang Nov 13, 2023 04:18 PM (GMT+8)

As an important participant in the capital market, securities firms should give full play to their professional strengths and specialties, contributing to China's high-quality development.


On November 9, Securities Association of China (SAC) released the "Corporate Social Responsibility Report of Securities Firms 2022" at the annual meeting of the 2023 Financial Street Forum.

As an important participant in the capital market, in the process of constantly striving towards the road of high-quality development, securities firms not only need to pay attention to their own business performance, but also need to effectively fulfill their responsibility, fully implement the new development concept, and make great efforts to promote rural revitalization, build a modernized industrial system, and enhance the coordinated development of regions by constantly giving full play to their professional strengths and specialties.

Firstly, in terms of exploring new paths of financial inclusion and actively contributing to rural revitalization, the achievements can be significant. Since 2016, SAC has successively launched the "One Division, One County" and "One County, One Enterprise" initiatives, advocating that industry organizations employ their professional strengths to serve local financing and support industrial development. Security firms play a role in various fields including financial assistance, industrial assistance, educational assistance, and public welfare assistance, transforming the assistance from "poverty alleviation" to "helping the poor", from "blood transfusion" to "blood creation", and from "passive" to "active", gradually constructed a new practice of financial inclusion in which the whole business chain participates in helping the poor, gives full play to its strengths in all aspects, and integrates resources in all fields.

As of the end of January 2023, a total of 103 brokerage firms have paired up to help 357 poverty-stricken counties, accounting for 43% of the total number; 60 brokerage firms have paired up to help 83 counties that are the focus of national rural revitalization, accounting for 52% of the total number. In 2022, brokerage firms have served 9 projects for enterprises in poverty-stricken counties to publicly issue stocks and go public, recommended 5 projects for enterprises in poverty-stricken counties to be listed on The National Equities Exchange and Quotations (NEEQ, known as the New Third Board), completed CNY 67.4 billion of direct financing for enterprises in poverty-stricken counties through rural revitalization bonds,  the New Third Board equity financing and stock issuance, while underwrite and issue green bonds (including green asset securitization products) of RMB 171.6 billion, underwrote and issued science and technology innovation bonds of CNY 102.8 billion, and won the bidding of local government bonds of CNY 22.7 billion. Specifically, outstanding entities in the industry include Shenwan Hongyuan's exploration of the "futures + insurance" mode of assistance, and the establishment of the Rural Revitalization Development Fund by Hualin Securities, which creates a sample of "finance + public welfare". Additionally, Western Securities has carried out various forms of assistance to help rural revitalization.

Secondly, the brokerage firms practice the new development concept in line with the national development strategy. Through assuming the political responsibility of serving the national strategy and actively integrating into the overall situation of national development, brokerage firms have insisted on serving the regional economic construction, deepening the reform of state-owned enterprises, and supporting the reform, innovation, transformation and upgrading of private enterprises, in order to jointly achieve the rapid development of the real economy. On the one hand, the industry focuses on the core problems of "difficult and expensive financing" of small and medium-sized enterprises, and makes full use of equity, bonds, asset-backed securities, mergers and acquisitions, restructuring and other financial instruments to guide the flow of financial resources to key areas and weak links, and effectively help private enterprises to alleviate their difficulties. During 2022, the securities industry's annual assist the real economy to complete direct financing of CNY 5.92 trillion, of which CNY 1.37 trillion financed through equity instruments such as IPOs, issuance of additional shares and share placements, and CNY 4.55 trillion finished through debt instruments such as corporate bonds and asset-backed securities.

It is worth mentioning that in the registration system, as brokerage firms and intermediaries are the capital market "gatekeeper", the quality and ability of their practice play an irreplaceable role in the efficient operation of the capital market, the quality of information disclosure of listed companies, preventing the risk of fraudulent issuance. In 2022, the audit and approval rates of the IPO projects and refinancing projects sponsored by the brokerage firms have maintained at a relatively high level. In terms of IPO audit pass rate, the projects in the registration system segment generally maintained a favorable  quality control ability, given that the audit pass rate of the projects in the registration system segment was above 87%; in terms of the audit pass rate of refinancing projects, the rate of the projects in all segments was over 96%. Specifically, China Galaxy Securities has contributed the the enhancement of the core competitiveness of manufacturing industry and the promotion the localization of RF chip wafers. Cai Tong Securities enabled the first enterprises in 26 counties in the mountainous areas of Zhejiang Province to be issued and listed on the NSE.

Thirdly, Chinese securities firms have deepened the industry's public welfare action, with public welfare expenditure exceeding CNY 3.6 billion over the past five years. In 2022, industry institutions continued to respond positively to the "Securities Industry Public Welfare Action for Rural Revitalization" initiated by the Association, and take "One Division, One County" as the main position. The industry will continue to deepen its "wisdom" and "blood-forming" functions, with public welfare investment covering the environment, education, medical care, disaster relief and inclusive financial education. It is reported that the securities industry in the past five years, the public welfare investment has consistently maintained a high level, the brokerage firms public welfare expenditure amounted to a total of CNY 3.67 billion. In 2022, a total of 42 brokerage firms public welfare expenditure amounted to more than CNY 5 million. Up till now, 69 brokerage firms have joined the public welfare action to promote rural revitalization, with a commitment of CNY 360 million; 25 brokerage firms have set up public welfare foundations, with a registered capital of CNY 206 million; and 44 brokerage firms have set up professional volunteer teams mainly composed of employees, with a total size of more than 10,000 people. Excellent practitioners in this area include Cheung Kong Securities, which has innovatively launched the "Lighthouse Plan" rural teacher training program, and Huafu Securities, which has set up the Xingyin Charity Foundation in Fujian Province.

Fourthly, the brokerage firms adhere to the practice of investor education and protection, as the protection of the legitimate rights and interests of the majority of small and medium-sized investors is an important foundation for the healthy development of the capital market. Currently, the number of investors in China's securities market has exceeded the 200 million remarkably. Acting as the capital market "gatekeeper", during 2022, the securities business entities firmly establish the concept of financial for the people, and actively construct a "big insurance" pattern. The industry has conducted 166,000 investment education activities, covering a total of 856 million people. For four consecutive years, it has carried out the activity of "investor education in 100 schools", with 67 securities firms going into 2,000 schools to organize investor education activities for more than 100 people, and promoting the incorporation of investor education into the national education system. For eleven consecutive years, the industry has carried out special activities to prevent illegal publicity, and in 2022, there have been more than 9,000 various kinds of publicity and publicity activities, further improved the effectiveness of preventing illegal publicity. Prominent practical subjects include Changjiang Securities, which incorporates green finance into its investment education work; Guorong Securities, which implemented the research on "the status of investor reading of listed companies' reports"; and China Merchants Securities, which launches the "investment education cloud service" model.

Finally, in the period of high-quality development opportunities, brokerage firms should should do something more. At present, as an important participant in the capital market, brokerage firms are facing the opportunity of high-quality development, and should focus on the construction of a modern capital market with Chinese characteristics as the main line, strengthen the financial support for key areas and weak links, and better play the functions of resource allocation, price discovery, risk management, and continue to optimize the market ecology, and promote the enhancement of the market's vitality, efficiency and attractiveness, and to maintain the capital market steady to good development trend.