As finance penetrates further into China's economic development and the Chinese financial reform accelerates its pace, it is inevitable for financial institutions, especially large ones, to follow the tendency toward integration. Therefore, for large investment banks, it is the trend of the times to choose the organizational and management model of financial holding companies. As conglomerates, these holding companies have some protection of separation of activities and also enjoy the efficiency of integration of activities. Independent brokers, however, will not die out in the foreseeable future. Small and medium-sized securities firms (and even private partnerships in investment banking) will survive and grow for a long period of time, as a necessary complement to financial holding companies. This is due to the following two reasons:

1. Financial holding companies are and will be limited by the developments of the Chinese financial market. They are also faced with some constraints of the existing regulatory system.

2. The independent model will be encouraged for innovation and continuity of expertise.

3 Conglomeration is one of the most-discussed topics in the Chinese academic circle. Many scholars believe that conglomeration, a highly specialized and centralized organizational structure, could help securities firms promote business and control risks. Currently, some large and medium-sized securities firms are trying to build such a structure by transforming into holding companies. However, such companies are not real financial holding companies. They simply build segregation between different securities-related services. They hold no bank assets and engage in no other financial activities than securities-related services. Therefore, such a model would not be the goal of Chinese securities firms in their development and would not become the mainstream model in investment banking. It is nothing but some advanced form of independent securities firms.

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