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Asset Management Business—Product Innovation

The asset management business of securities companies falls into the category of wealth management. Thirty years after the end of World War II, the new middle class emerging in the United States and Europe created favorable opportunities for the development of the wealth management business. It has been 30 years since China started reforming and opening up, and the rich class of the society has already taken shape. Their demand for wealth management will also promote the growth of the wealth management business in China.

Due to policy restrictions, the asset management business of securities companies is limited in various aspects such as issuance, promotion, scale, and investment means. As a result, the development of the asset management business of securities companies is delayed. There is little room for product innovation. Neither the scale nor the revenue can be effectively improved.

The loosening of policies is essential for the development of the asset management business of securities companies. Regulators are speeding up policy loosening. By 2010, the product approval procedure had been reformed to make the process from over six months to within three months.

The issuance of collective wealth management products is evidently faster, with rising scale. In September 2011, the China Securities Regulatory Commission circulated to the asset management division of each securities company an outline of the revision of the Trial Implementation Measures for the Customer Asset Management Business of Securities Companies (for solicitation of opinions). This opened up new space for innovation in asset management. After the adoption of the filing system, the asset management business of Chinese securities companies was expected to make great breakthroughs and reenact the development speed of their American counterparts. The establishment of their asset management companies by Orient Securities and Everbright Securities reflected the importance attached to the asset management business by the management of these securities companies.

With the gradual loosening of regulation, making a great effort for product innovation is the way forward for the asset management business of securities companies. Securities companies should strengthen customer resources sharing between different business divisions so that key customers of the investment banking, brokerage, and other divisions also become the customers of the asset management division. Based on diversified and individualized needs of investors and guided by market demand, securities companies should enhance product development and innovation in the asset management business and design wealth management products with varying risk and return characteristics.

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