Financial Associated Press, May 1 (Reporter Lin Jian)Compliance and risk control is the bottom line for the sustainable development of securities companies, and it is also the “lifeline” of securities companies. According to incomplete statistics from the annual reports of 43 listed securities companies, a reporter from the Financial Associated Press found that the investment in compliance and risk control funds has exceeded 7 billion yuan, an increase of about 30% over the same period. From the analysis of investment funds, the securities industry still attaches great importance to compliance and risk control. on ascension.
The picture shows a list of some compliance and risk control funds invested by listed securities firms in 2022. According to the content of the annual reports of various securities firms and the recent interviews during the special forum on compliance and risk control held by Sinovel Technology, the reporter learned that in 2022, securities firms will invest in compliance and risk control. The aspect presents the following characteristics:
First, compared with 2021, due to the impact of multiple unexpected factors, the operating performance of the securities industry is under short-term pressure, so the growth rate of investment in compliance and risk control has slowed down, such as Zhongtai Securities, Northeast Securities, Guoyuan Securities, and Great Wall Securities. Investments in securities, Guohai Securities, etc. all dropped slightly.
Second, Huatai Securities, Haitong Securities, China Securities, China Merchants Securities, CICC, and Galaxy Securities all exceeded 500 million yuan. In addition, the investment of small and medium-sized securities management institutions is relatively small, but they have increased their investment, such as Western Securities, Caida Securities, Huaan Securities, Hongta Securities and so on.
The third is that although fines will still appear frequently in 2022, brokers realize that under the comprehensive registration system, they will further consolidate the duties of “gatekeepers”. Facing the trend of “zero tolerance” and “heavy punishment” in supervision, the practice of covering up substantive compliance with formal compliance cannot avoid regulatory risks. The bottom line, principled requirements and management and control details cannot be ignored. Standardized operation of business in the sun is the key to development road.
Fourth, the viscosity of information technology and compliance risk control has deepened. On the one hand, building digital compliance and digital risk control capabilities has become the mainstream choice of securities companies, but there is a long way to go; on the other hand, frequent information technology risks have exposed the shortcomings of compliance risk control. This is a new change in the industry and requires be taken seriously.
Fifth, the focus of compliance and risk control has gradually shifted to the business department. Investment banking business, innovative business, and self-operated business are still the key. In the face of risk compliance incidents, securities companies basically stated that they should comprehensively inspect internal control defects and strictly enforce accountability and warnings , to demonstrate the bottom line power of compliance.
Sixth, the supervision continues to “support the good and limit the bad”. The “white list” system is still guiding the securities industry to pay attention to compliance operations. Although the official website of the China Securities Regulatory Commission no longer updates the progress of the white list, it still continues to play a role.
It can be seen that in 2022, there will be several information technology risks related to downtime in the securities industry. The person in charge of the line has worked in the company for a long time and has a certain inertia. He needs the assistance of an external professional organization to discover potential risks and avoid various network security incidents. “You can also go through a general physical examination by a professional organization to find out your own strengths and weaknesses, form a military combat map, and magnify the efficiency of IT investment.”
Zhang Yin, consulting business partner of Sinovel Financial Technology Research Institute, pointed out that the bottom line of risk management is compliance, and the goal is to integrate with development strategies through a multi-level risk governance system. Therefore, it is urgent to form a set of controls covering all areas. It can guide the information technology risk and compliance system in various fields. He also mentioned that the industry needs to pay more attention to the management of compliance and risk control under information technology.
It is not a dream that the compliance and risk control of top brokerages exceeds 1 billion
On the whole, in 2022, securities companies will continue to consolidate their capital strength, and the industry’s risk management and control capabilities will continue to increase. As of the end of 2022, the industry’s total assets are 11.06 trillion yuan, net assets are 2.79 trillion yuan, and net capital is 2.09 trillion yuan, an increase of 4.41%, 8.52%, and 4.69% over the end of the previous year, respectively. The overall risk control indicators of the industry are better than the regulatory standards, and the compliance risk control level is healthy and stable.
Among the 43 securities firms, except for CITIC Securities, which has not disclosed the capital data of compliance risk control in the annual report, Huatai Securities, Haitong Securities, China Securities, China Merchants Securities, CICC, and Galaxy Securities have invested in compliance risk control funds. Both exceeded 500 million yuan, Huatai Securities has reached 760 million yuan, and the growth rate has reached 17%, and CICC has also increased investment at a growth rate of 24%. This means that the investment of more than 1 billion yuan in compliance and risk control funds by top brokerage firms is expected to be realized in the next few years.
The picture shows the continuous increase in Huatai Securities’ investment in compliance risk control. Huatai Securities stated that the company attaches great importance to compliance operations and risk management, continues to strengthen the construction of compliance risk control systems, strengthens the deployment of compliance risk control personnel, and increases compliance risk management. Control system construction investment.
CICC stated that the company continued to strengthen the construction of the central control platform and strictly adhered to the bottom line of risks. Strengthen the management and control system of 1.5 lines of defense in the expansion department, form a multi-level and comprehensive compliance risk control system, improve operational efficiency, prevent financial risks, strengthen the construction of institutional culture, and stick to the bottom line of integrity and compliance.
China Securities Investment said that the company attaches great importance to compliance management and risk management, continues to improve compliance management and risk management system construction, and continuously expands the team of compliance and risk control personnel and optimizes their allocation.
Caida Securities, Huaan Securities, and Hongta Securities, which did not invest heavily in compliance and risk control funds in the past, are increasing their investment in compliance and risk control. This reflects another industry ecology, that is, compliance and risk control management is not limited to top brokerages “competition”. Caida Securities stated that the company has always firmly established the value concept of “compliance promotes development, risk control increases efficiency”, the awareness of compliance risk control is continuously strengthened, the compliance risk control management system is continuously improved, and the company continues to create stable returns for shareholders. In the following respects:
One is to establish a comprehensive awareness of compliance, establish a scientific and effective compliance management mechanism, cultivate a good compliance culture, and closely integrate compliance management with the company’s business development;
The second is to build a risk management organizational structure that is suitable for business reality and implement effectively, establish a comprehensive and scientific risk indicator system for business lines, and introduce a risk management technology system that can meet the needs of daily risk measurement, monitoring and reporting. The company continues to develop steadily.
Hua Securities stated that in order to adapt to the new regulatory environment and strengthen business management capabilities under the new situation, the company has strengthened the compliance team, system, and cultural construction to enhance the professional capabilities of personnel and continuously improve the level of compliance management. According to the principle of “regulation, risk control and non-contradictory”, actively participate in the development of various businesses, and promote legal and compliant business development through regulatory policy interpretation, system review and check, implementation guidance and implementation.
The reporter noticed that although Hualin Securities did not disclose the amount invested in compliance risk control, it disclosed in detail the company’s compliance risk control personnel structure and allocation in its annual report. It is understood that the compliance and legal department of Hualin Securities is the compliance department, which is responsible to the compliance director and performs compliance management duties in accordance with the company’s regulations and the arrangement of the compliance director. By the end of 2022, there will be a total of 8 full-time staff in the compliance and legal department , undertake compliance review, compliance consulting, compliance inspection and other responsibilities, set up 6 full-time compliance management posts in the first-level business departments, and set up 41 full-time compliance management posts in branches with more than 15 employees (inclusive). Set up 70 full-time/part-time compliance management posts in other branches with less than 15 employees. According to statistics, there are a total of 119 full-time and part-time compliance management personnel in Hualin Securities business departments and branches.
Business line enhances the awareness of compliance and risk control, and formulates a special assessment system
In addition to compliance and risk control departments, many securities firms have also set up independent quality control and management departments for key business lines such as investment banks. , The multi-level risk prevention and control system of the company’s risk management department, such as Zheshang Securities, Northeast Securities, etc. In addition, according to the annual report, through continuous optimization of the compliance and risk control system, the quality of Huatai Securities’ investment banking projects has been further improved, and the approval rate of IPO projects in 2022 will reach 100%.
Guotai Junan has also incorporated innovative business into the comprehensive risk management system, established and improved the decision-making mechanism, management model and organizational structure that are suitable for the business in view of the development status and risk characteristics of innovative business, formulated relevant innovative business compliance and risk management systems, and standardized The risk management of the whole process of innovative business has been carried out, and through the risk assessment and decision-making of innovative business, acceptance and launch, continuous management and other work, it has ensured that various innovative businesses continue to develop steadily under the premise of measurable, controllable and bearable risks. Guotai Junan stated that before the company’s innovative business is launched, the company’s risk management department conducts compliance demonstrations, identification, evaluation, and measurement analysis of relevant risks, and guides the business department to improve the construction of internal control mechanisms such as systems and processes.
CICC stated that the company has established new business and new product risk assessment, prevention and resolution mechanisms. For businesses or products with new characteristics and new risks, they must follow the relevant regulations on new product management. Risks or uncertain factors, risk control measures, etc. are reviewed, evaluated and approved by the company’s new product committee, and follow-up review and monitoring are carried out to ensure that innovative business development and risk management capabilities match.
Huaxi Securities has deepened the pre-registration of compliance and risk control, continued to improve the construction of a comprehensive risk management system, and established a compliance and risk control system that develops in coordination with the business. In addition, for different businesses, some securities firms have designed different assessment objectives, and embed compliance risk control into the assessment indicators, such as Zheshang Securities.
Securities firms step up efforts to build digital compliance and digital risk control capabilities
In recent years, a new round of scientific and technological revolution has advanced in depth, and the digital transformation of the securities industry has continued to deepen. Digital technologies represented by artificial intelligence, big data, cloud testing, and cloud computing have continuously expanded application scenarios in the securities field. Wealth management business, large investment banking business, asset management business and other business directions are developing, and they are closer to compliance and risk control management.
The reporter noticed that building digital compliance and digital risk control capabilities has become the mainstream choice of securities companies, but there is a long way to go.
Taking the development of financial technology as an opportunity, Western Securities effectively promotes the steady implementation of IT strategy and effectively guarantees the safe and stable operation of the information technology system. A sound compliance risk control system and a stable information system provide a strong guarantee for the company’s business development.
Huatai Securities uses technology to drive compliance and risk control professional capabilities;
Haitong Securities, driven by collectivization, internationalization and informatization, strengthens the construction of the four pillars of compliance and risk control, talents, IT and research;
Great Wall Securities further promotes digital empowerment compliance management, strengthens the construction of compliance management system, self-develops a smart compliance risk control platform, and continues to build and improve modules such as legal library, case library, investment behavior management and control, and anti-money laundering monitoring;
China Securities Construction Investment promotes the construction of compliance risk control system by combining independent development and outsourcing, and continues to increase investment to promote the timeliness, professionalism and intelligence of compliance risk control;
In the field of compliance and risk control, Northeast Securities has built a compliance portrait, continuously improved the comprehensive risk management platform, strengthened the actual management and control of the business, and continued to improve the level of compliance and risk management;
Guotai Junan continued to improve the application level of financial technology in compliance management, and comprehensively upgraded the legal compliance platform;
Industrial Securities accelerates financial technology to empower risk management, and builds a digital intelligence, vertical penetration, centralized and unified comprehensive risk management system;
Caitong Securities established a collaborative work mechanism for classified evaluation, comprehensively implemented important new regulatory regulations, improved the internal rules and regulations system, and promoted the construction of a “digital intelligence compliance” platform;
Sinosea Securities optimized the construction of an information-based and intelligent system for compliance risk control, improving the review efficiency and agile response capability of compliance risk control;
Supervision increases supervision of compliance and risk control and industry norms
It is worth mentioning that compliance management and risk management may receive further attention from brokerages from 2023 onwards.
At the end of March this year, in order to promote the high-quality development of the securities industry, improve the quality and efficiency of serving the real economy, strengthen and improve modern financial supervision, and keep the bottom line of avoiding systemic risks, the China Securities Regulatory Commission revised the current “Regulations on the Supervision and Administration of Securities Companies” and compared it with the new one. The revised Securities Law has formed the “Regulations on the Supervision of Securities Companies (Revised Draft for Comments)”, which is open to the public for comments.
Among them, the “Draft Regulations” amended to strengthen compliance risk control, improve internal and external restraint mechanisms, highlight full coverage of compliance risk control, and strengthen comprehensive risk management; supplement recovery and disposal plans, management of subsidiaries and branches, and prevention and control of conflicts of interest , Related party transaction management, abnormal transaction monitoring, honest practice, personnel management and other key system requirements, the system stipulates the information technology system. The corresponding content occupies Articles 29 to 39 of the Draft Regulations, a total of ten articles.
The new regulations require that securities firms should establish and improve compliance management, risk management and internal control systems in accordance with the principle of prudent operation, covering all departments, branches, subsidiaries at all levels, all staff and all business links of the company, effectively preventing and control risk.
The new regulations also require that securities firms should establish a comprehensive risk management system that is compatible with their own development strategies and operating conditions, and conduct accurate identification, prudent assessment, dynamic monitoring, timely response, and full-process management of various risks in the company’s operations.Securities firms shall establish a dynamic risk control indicator monitoring mechanism and capital replenishment mechanism to ensure that each risk control indicator complies with the standards stipulated by the securities regulatory agency of the State Council, and any abnormal situation shall be reported and dealt with in a timely manner in accordance with regulations.
It is worth mentioning that, at the regulatory implementation level, the China Securities Regulatory Commission will adopt a differentiated regulatory approach and implement classified supervision of securities companies based on their governance structure, compliance risk control, and business development. At the same time, corresponding penalties will be set for illegal acts corresponding to the revised content of the “Regulations”.