China Settlement's reduction in the minimum settlement provision rate for stock businesses is actually nothing new. As early as December 2019 and April 2022, the minimum settlement provision payment ratio for stock businesses has been reduced. After these two cuts, the minimum settlement provision payment ratio for stock businesses has been reduced from 20% to 16%. Now, brokerage firms have ushered in another “downgrade” initiative. After this adjustment, the minimum provision payment ratio for stock businesses will be further reduced to around 15%.
The most direct impact of the reduction in the settlement provision payment ratio is that brokers' settlement and payment capital in China has been reduced, further improving the utilization rate of capital and increasing flexibility in the brokerage industry. After many cuts, more capital can be released for the brokerage industry, and this capital can be used in more practical places.
Judging from the first two “targeted downgrades” measures of brokerage firms, the impact on the brokerage sector is not particularly obvious. Apart from the changes in the brokerage sector in December 2019, the overall performance was relatively calm.
From the analysis of historical trends in the brokerage sector, since peaking in the second half of 2020 and starting a round of market adjustments, the cumulative adjustment cycle of the brokerage sector has been as long as two and a half years. If we start from the perspective of the adjustment cycle, this round of adjustment trends in the brokerage sector is quite adequate.
The brokerage industry itself is an industry sector with a strong cycle, and its performance is often the rain or shine of market conditions...