The annual classification evaluation of securities brokerages is a key differentiated regulatory tool in the capital market, with ratings directly determining risk capital provisioning standards, regulatory inspection intensity, eligibility for innovative business access, and cooperation space with peer institutions. It is also widely regarded by the market as the core "industry report card" for measuring a broker's comprehensive operational strength and risk control level.

The 2026 securities brokerage classification evaluation continues the long-standing general approach of "supporting the strong and limiting the weak, with tiered supervision." At the same time, the policy toolkit has seen an important update, with the addition of a specialized bonus for mergers and acquisitions being the biggest policy highlight. This clearly signals the regulator's medium-to-long-term orientation of supporting market-based consolidation in the securities industry, building world-class investment banks, and continuously strengthening institutional compliance bottom lines.

Category A Brokerages Make Up Half of All Firms

Looking at the final rating distribution, the industry's rating structure has remained relatively stable in recent years. The tier of leading high-quality brokerages is largely solid, and the stratification of institutions continues to be evident. Among the 106 brokerages evaluated, there are 53 Category A firms (50%), 42 Category B firms (40%), and 11 Category C firms (10%). There are no Category D firms this year.

Category A brokerages are internally divided into the highest industry grade, AA, and Grade A. There are 14 AA-grade brokerages and 39 A-grade firms. Category B includes three sub-tiers: BBB, BB, and B, representing brokerages with basically satisfactory operating conditions. Category C encompasses three sub-tiers: CCC, CC, and C, corresponding to institutions with varying degrees of risk.

The 14 AA-grade brokerages include CITIC Securities, Guotai Haitong Securities (the merged entity of Guotai Junan and Haitong Securities), Huatai Securities, GF Securities, China Merchants Securities, Shenwan Hongyuan, China Galaxy Securities, CICC, CSC Financial, East Money Securities, Changjiang Securities, BOC International, SDIC Capital (Anxin Securities), and Guosen Securities.

Compared to previous years, some brokerages have lost their AA-grade status due to compliance penalties. Market information indicates that major regulatory penalties, investigations, and substantive compliance risk events are the core triggers for rating downgrades. Against the backdrop of increasingly strict scoring rules, the AA grade is no longer a "permanent qualification." Sustained and stable compliance management capabilities have become a hard prerequisite for leading brokerages to maintain the highest rating.

There are 39 A-grade brokerages, with key representative institutions including Industrial Securities, Everbright Securities, Sinolink Securities, Caitong Securities, Zheshang Securities, Nanjing Securities, Soochow Securities, Orient Securities, Cinda Securities, Great Wall Securities, Ping An Securities, Huaxi Securities, Guoyuan Securities, Southwest Securities, CITIC Securities (Shandong), Bohai Securities, and Caida Securities. A-grade brokerages form the backbone of the industry. Some institutions have the potential to challenge for the AA grade and are the main players in differentiated competition within specific segments.

There are 42 Category B brokerages, with key representative institutions including Xiangcai Securities, Guosheng Securities, Dongxing Securities, Huachuang Securities, Sealand Securities, Western Securities, First Capital Securities, Hongta Securities, Century Securities, Yongxing Securities, and Guorong Securities. It is noteworthy that Xiangcai Securities and Guosheng Securities are among them. These two brokerages were recently placed under investigation by the China Securities Regulatory Commission for violations of account real-name system rules. However, the related violations occurred after the evaluation period cut-off date (April 30, 2026), so they do not affect the current 2026 rating. However, they will directly lead to score deductions and potential downgrades in the 2027 classification evaluation. Their subsequent operations and risk control status warrant continued monitoring.

Additionally, GF Securities, Hongta Securities, Century Securities, Guoyuan Securities, Guorong Securities, and Yongxing Securities have successively received warning letters and corrective measures related to their investment banking operations, which have been recorded in their integrity files. The relevant penalties have already been reflected in score deductions in this classification evaluation. The quality of investment banking due diligence and ongoing supervision remains a key focus of regulatory inspection, and compliance risks in investment banking business will continue to impact brokerages' annual scores.

Key Adjustments in Evaluation Rules

The overall framework for this year's classification evaluation indicators is stable, with specific indicators optimized and adjusted in line with key capital market reforms. Several new regulations profoundly impact brokerages' operational strategies and reshape the competitive landscape of the industry.

Regulators have, for the first time, set a specific score value for mergers and acquisitions, encouraging brokerages to carry out market-based consolidation and integration, in line with the policy goal of building world-class investment banks. Institutions that successfully implement M&A can receive bonus points, which will directly affect whether they can maintain their AA grade or challenge for a higher rating. This means that M&A integration has been elevated from a spontaneous market behavior to a direction with positive regulatory incentives, providing an important institutional tool for industry consolidation.

The 2026 classification evaluation continues to retain the special bonus points for the "Five Major Areas of Finance," continuously guiding brokerage resources toward the five key areas of technology finance, green finance, inclusive finance, pension finance, and digital finance. This encourages brokerages to leverage their role as direct financing intermediaries to better serve the real economy and national strategies.

Furthermore, regulators have included share buybacks and cash dividends of listed brokerages as evaluation indicators, using the evaluation mechanism to guide listed brokerages in consistently rewarding shareholders. Following the implementation of this policy, several listed brokerages have established market value management teams, increasing dividend payouts and share repurchase operations to balance secondary market stock price stability with the requirements of the classification evaluation, thereby promoting a more beneficial shareholder return mechanism within the brokerage industry.

The compliance deduction mechanism has been comprehensively tightened. Administrative penalties and regulatory measures imposed on institutions, their directors, supervisors, senior management, and frontline business personnel all result in score deductions. The magnitude of deductions has significantly increased for high-frequency risk areas such as account management violations in brokerage business, off-exchange securities allocation, and deficiencies in investment banking due diligence. This indicates that the regulator is continuously sending a policy signal that business expansion cannot override compliance and risk control.

Several bonus points oriented toward the real economy have been maintained. The evaluation continues to include bonus points for the quality of investment banking practice, services for the Beijing Stock Exchange, and the creation of private enterprise financing tools. This encourages brokerages to fulfill their direct financing function and support the development of small and medium-sized enterprises and the private economy.

Impact of Rating Differences

Classification evaluation is not simply an industry ranking; the accompanying differentiated regulatory policies profoundly affect the fundamentals, capital planning, and business layout of brokerages, mainly reflected in the following five aspects:

First, significant differences in capital constraints. AA and A-grade brokerages have the lowest provisioning standards for risk capital, effectively conserving their own capital and supporting the sustained expansion of capital-heavy and innovative businesses. For C-grade brokerages, the provisioning standards are significantly higher, continuously increasing the pressure on capital consumption and naturally constraining the space for business expansion.

Second, tiered management of regulatory intensity. AA and A-grade brokerages face lower on-site inspection frequency. C-grade brokerages are designated as key regulatory targets, with significantly enhanced daily regulatory constraints and stricter review standards for new business matters of all types.

Third, qualification thresholds for innovative businesses. Regulatory resources for innovative businesses with high capital consumption and complexity, such as derivatives, cross-border business, public fund custody, and options market-making, are primarily opened to Category A brokerages. Rating gaps directly translate into competitive chasms in business tracks.

Fourth, divergence in institutional cooperation and financing costs. Large institutions like banks, insurance companies, and public funds generally prioritize AA/A-grade brokerages for businesses such as interbank lending, distribution cooperation, and asset management access. A rating downgrade often pushes up the financing rates for brokerages' financial bonds and subordinated bonds, increasing long-term liability costs.

Fifth, impact on market reputation and investor expectations. Changes in rating upgrades or downgrades can directly affect confidence in the secondary market, creating a ripple effect on the valuations of listed brokerages and their bond financing.

Accelerating the Reshaping of the Securities Industry's Development Logic

Overall, the 2026 securities brokerage classification evaluation clearly signals two major regulatory themes. First, supporting the strong to become stronger, promoting industry consolidation and clearing out weak players. Second, continuous tightening of compliance supervision, consolidating the responsibility for risk control across the entire chain.

Looking at the medium to long term, the adjustments to the rating rules this time will accelerate the reshaping of the securities industry's development logic.

In the short term, AA-grade leading brokerages, benefiting from lower capital charges, a more relaxed regulatory environment, and priority access to innovative businesses, are continuously strengthening their competitive moats. They will continue to expand their leading advantages in high-capital, high-barrier businesses such as cross-border investment banking, derivatives, and institutional trading.

In the medium to long term, the special bonus points for M&A will become one of the most important catalysts for the evolution of the industry landscape. For a long time, the domestic securities industry has had too many institutions, leading to intense homogeneous competition. Small and medium-sized brokerages generally face pain points such as weak capital strength, single business lines, and insufficient risk resilience. With positive policy incentives, leading brokerages with capital advantages and sound governance are expected to initiate market-based acquisitions, using them to fill gaps in regional networks, business licenses, and customer resources by acquiring regional and specialized small and medium-sized brokerages.

The development paths for small and medium-sized brokerages are gradually diverging. Some institutions with unique resources, deep regional market roots, and good compliance records may seek M&A integration opportunities. Others, which continuously experience compliance risks and lack differentiated competitiveness, will face ongoing pressure from rating downgrades, business restrictions, and customer churn, gradually becoming marginalized by the market.

At the same time, compliance has become a fundamental requirement for the survival and development of brokerages. Regulators are continuously increasing penalties for account management, investment banking quality control, and off-exchange business, with the cost of non-compliance constantly rising. The past development model of "focusing on business scale, neglecting risk control and compliance" is unsustainable, forcing the entire industry to increase investment in building risk control systems.

In the future, brokerages will form two clear development paths. Leading brokerages, leveraging their capital and rating advantages, will build comprehensive world-class investment banks through consolidation and expansion. Small and medium-sized brokerages will abandon competition across all business tracks, focusing on niche areas such as wealth management, regional investment banking, and specialized asset management, pursuing a differentiated and boutique route.

Furthermore, the inclusion of cash dividends and share buybacks as assessment indicators will continue to guide listed brokerages in optimizing their profit distribution mechanisms. This will help improve the capital market's entrenched perception of the brokerage sector as "highly cyclical with low returns," promoting a value revaluation of the industry. Combined with the continued implementation of bonus points for serving the Beijing Stock Exchange, private enterprise financing tools, and the "Five Major Areas of Finance," the assessment weight of brokerages' services to the real economy is constantly increasing. The industry's development focus is shifting from purely pursuing revenue scale to a balanced development of "scale, risk control, social value, and shareholder returns."