The China Securities Regulatory Commission recently released the 2026 classification evaluation results for securities firms, with 106 companies participating this year, including 44 subsidiaries consolidated into their parent companies' evaluations. The distribution of ratings followed the same proportions as previous years, with 53 Class A companies, 42 Class B companies, and 11 Class C companies. Among Grade A firms, 14 achieved the AA rating.
The securities firm classification evaluation system is a foundational regulatory tool, serving as a key mechanism to convey regulatory guidance and act as a "command baton" for the industry. Overall, the evaluation indicators remained largely stable this year, continuing to guide securities firms in enhancing their functional roles and professional service capabilities, while maintaining strict oversight to ensure compliance with regulatory boundaries. Minor adjustments were made to certain indicators, such as adding a special bonus score for promoting mergers and acquisitions among securities firms, encouraging industry consolidation and strength-building.
According to reports, regulators will focus on further interpreting the 2026 classification evaluation results to enhance transparency, while continuously monitoring the implementation effects of the evaluation system. They plan to adjust indicators and standards as market conditions evolve, better leveraging the "command baton" role of classification evaluations.
The proportion of firms in each category has remained stable overall. The classification evaluation is based on a firm's risk management capabilities, ongoing compliance status, and performance in business development and functional roles. Since its inception in 2007, the evaluation period runs from May 1 of the previous year to April 30 of the current year. The evaluation indicators include four categories: risk management capability, ongoing compliance, business development, and special work items. The first three categories have stable scoring rules defined by the Securities Firms Classification Evaluation Regulations, while special work indicators can be dynamically adjusted to reflect current regulatory priorities, with additional indicators added when necessary to guide industry direction.
In recent years, the proportion of securities firms in each category has remained consistent, with Class A, B, and C firms accounting for approximately 50%, 40%, and 10%, respectively, and AA-rated firms making up about 25% of Class A companies. The evaluation system reflects four key regulatory directions.
To ensure rule continuity and stabilize industry expectations, most special work indicators for this year's evaluation were carried over from 2025, with minor adjustments based on current market conditions. In terms of functional role, the evaluation system continues to guide securities firms in maintaining market stability, with indicators for expert advisory roles, market-making liquidity support, and listed securities firms' share buybacks and dividends. Additionally, the Securities Association of China revised the "Five Major Articles" special evaluation method this year, marking the second consecutive year of adding bonus points for this area.
The evaluation system also encourages securities firms to support private enterprise development, with continued bonus points for private bond underwriting and credit protection tool creation, as well as social responsibility evaluations. This directs firms to actively serve rural revitalization, coordinated development, and public welfare. In terms of professional capability, the system added a special bonus for promoting securities firm mergers and acquisitions, guiding efficient and smooth integration. It also retained bonus points for investment banking quality and support for listed company M&A, encouraging firms to strengthen their investment banking capabilities and serve as direct financing "service providers" and capital market "gatekeepers." Continued participation in the Beijing Stock Exchange reform evaluation guides firms to provide quality financial services to small and medium enterprises.
Regarding compliance boundaries, the evaluation system incorporates all securities firms, their branches, domestic and overseas subsidiaries, as well as directors, supervisors, senior management, branch heads, and key business personnel. It includes all penalties, regulatory measures, self-regulatory actions, applications for administrative law enforcement party commitments, and advance compensation cases, sending a clear signal for comprehensive compliance and risk control. For firms with weak compliance and risk control, particularly those with obvious issues or potential risks, the system emphasizes substantive judgment and applies relevant rules to deduct points fully.
Furthermore, the evaluation system strengthens oversight of employees, strictly deducting points for violations such as illegal stock trading, unauthorized client asset management, and involvement in off-exchange margin trading by directors, supervisors, senior management, branch heads, and key personnel. This pressures firms to improve their personnel management mechanisms. In terms of fostering industry culture, the system retains the cultural construction practice evaluation, guiding the industry to adopt "Five Musts and Five Must-Nots" Chinese financial culture. It also strengthens clean governance, deducting points for firms with frequent bribery incidents, criminal penalties, or detention measures against key personnel, while canceling cultural construction bonuses. Firms that proactively identify, address, and effectively rectify issues receive positive evaluations.
Comments