After more than 20 years, the Chinese securities industry has become preliminarily functional in the service to the capital market and the improvement of capital efficiency. As the core service agency in the capital market, Chinese securities firms have also made their own way to growth and gained experience. They are increasingly clear about their operating models in brokerage, underwriting, proprietary trading, and consulting services. They are also very active in innovation. By either international experience or Chinese practice, the securities industry is, relatively speaking, strictly regulated by policy and regulations because of its significant impact on economic stability, public wealth, fair competition, and market speculation. Therefore, the management model in securities firms is the result of legislative and regulatory control as well as market competition for efficiency.

The same is true of the Chinese securities industry and the principal parties of securities firms. The exploration, change, and innovation of the management model in Chinese securities firms will continue to be policy oriented, path dependent, and market-demand driven. To some extent, this is subject to the effect of multiple factors such as economic and institutional features, capital market maturity, and historical experience. Financial holding companies, independent securities firms, and emerging private securities institutions will also be driven by policy and market in further development, differentiation, and growth. They may, however, vary greatly in terms of dependence on policy or market factors.

Operations and Oversight Based on Separation of Activities and the Financial Holding Model

Currently, there are clear and complete industrial boundaries plus a regulatory framework under the established Chinese financial management system, which builds on the principle of operations and oversight based on separation of activities. The National People's Congress has promulgated the Commercial Banking Act^ the Securities Act, the Insurance Act, and the Banking Oversight Act. It has defined basic industrial connotations, set basic regulatory rules, and delegated regulatory powers to regulatory agencies under the State Council for banking, securities, and insurance sectors, respectively. How to introduce the financial holding model to the current legal framework is a project that requires the effort of both policymakers and market participants.

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