Subsidiaries' capital increase actions are swift and precise; securities firms' international business is exerting effort across the entire chain.

Securities Times reporter Yang Qingwan

Since the beginning of this year, brokerage firms have frequently accelerated the capital increase of their Hong Kong subsidiaries, with at least 8 listed brokerages currently advancing capital increase matters. Among them, both China Merchants Securities and Huatai Securities plan to increase capital for their international subsidiaries, with amounts not exceeding HKD 9 billion, while GF Holdings (Hong Kong) plans a capital increase of no more than HKD 6.101 billion.

At present, the structure and dimensions of brokerage firms’ international business have changed, no longer limited to investment banking services such as IPOs and bond issuances, nor solely providing brokerage channel services; instead, they are shifting towards a full-chain service model in international investment banking.

A CEO from a leading Chinese brokerage firm told Securities Times reporters: “We have gradually built a distinctive cross-border one-stop product and trading platform, providing domestic and foreign investors with comprehensive services covering cross-border trading, product creation, and derivative hedging, which used to be the domain of foreign investment banks.”

Accelerated Capital Increase or New Establishment

Since the second half of last year, several listed brokerages have announced capital increases or the establishment of new Hong Kong subsidiaries. Especially in the first quarter of this year, leading brokerages have increased the scale and intensity of capital increases for their international business subsidiaries, and the pace has also accelerated.

According to incomplete statistics from Securities Times reporters, in June last year, Western Securities received approval from the China Securities Regulatory Commission to invest HKD 1 billion in the preparation of a wholly-owned subsidiary in Hong Kong; in August last year, First Capital Securities was approved to prepare an international financial holding company (licensed subsidiary in Hong Kong) to conduct securities trading, asset management, and other licensed financial businesses in Hong Kong; in February this year, Northeast Securities planned to invest HKD 500 million to establish Dongzheng International and lay out its international business.

Meanwhile, larger mid-sized brokerages that established Hong Kong subsidiaries earlier and have already gained a foothold are choosing to significantly increase capital for existing international platforms (usually Hong Kong subsidiaries), supplementing their capital strength to expand overseas business types and enhance cross-border service capabilities. Dongwu Securities proposed a capital increase for its Hong Kong subsidiary in its private placement plan last July and received a reply from the China Securities Regulatory Commission in February this year, planning to increase capital by no more than HKD 2 billion; in August last year, CITIC Construction Investment planned to increase capital by HKD 1.5 billion for CITIC International to expand the coverage of its overseas business; in October last year, Shanxi Securities planned to increase capital by HKD 1 billion for Shanxi International to enhance its international operational capabilities; in December last year, China Merchants Securities’ subsidiary, China Merchants International, planned a phased capital increase for its wholly-owned subsidiary, totaling no more than HKD 9 billion, with the first phase targeting China Merchants Securities (Hong Kong) and a capital increase scale of no more than HKD 4 billion.

Entering 2026, the scale of capital increases by leading brokerages has further increased, and the pace has accelerated. Following China Merchants Securities, on January 23, Huatai Securities’ board of directors approved plans to increase capital for its subsidiary Huatai International Holdings by no more than HKD 9 billion; on February 11, Huaxin Securities announced plans to increase capital for Huaxin Securities (Hong Kong) by HKD 500 million; on March 13, GF Securities announced plans for a one-time or phased capital increase for GF Holdings (Hong Kong) not exceeding HKD 6.101 billion, which is still pending regulatory filing approval.

Business Structure Transitioning to Full Chain

From a licensing perspective, investment banking remains a battleground for Chinese brokerages, especially leading ones. The financing actions of Hong Kong IPOs, refinancing, and mergers and acquisitions remain active, driving significant growth in new stock subscriptions and margin trading. According to the Hong Kong Securities and Futures Commission, the maximum margin loan amount relative to net capital cannot exceed five times; thus, as margin financing demands surge, some small and medium-sized brokerages need to bolster their investment banking teams and supplement their net capital strength.

In the wealth management sector, a large number of Hong Kong IPO projects have created wealth effects, with shareholders of listed companies being predominantly high-net-worth individuals. Moreover, the increasing demand for cross-border asset allocation from mainland residents in a low-interest-rate environment has provided vast development space for wealth management businesses. Currently, financial institutions represented by UBS, HSBC, and CICC are still further recruiting talent to strengthen their cross-border asset management and wealth management capabilities.

Against this backdrop, the business structure of Chinese brokerages in Hong Kong has shifted—from traditional channel service providers to full-chain comprehensive financial service providers. Especially with the rise of trading and institutional business, more and more leading brokerages are committed to providing comprehensive cross-border financial solutions for domestic enterprises, institutions, and residents investing in overseas markets, as well as for foreign institutions and individuals investing in domestic markets.

The aforementioned CEO from a leading Chinese brokerage firm told Securities Times reporters that in the past, foreign investment banks dominated the creation and trading of cross-border and cross-asset products, but now Chinese brokerages are gradually building distinctive cross-border one-stop product and trading platforms to provide comprehensive services for domestic and foreign investors, covering cross-border trading, product creation, and derivative hedging.

This CEO also revealed: “The capital increase of leading brokerages for their Hong Kong subsidiaries this time mainly aims to enhance the ability to create cross-asset category products overseas and the trading capabilities across overseas markets. The income structure is adjusted to focus on non-directional income, mainly from customer businesses such as structured notes, repos, derivative hedging, and market-making.”

Guotai Junan International’s recently disclosed 2025 annual report shows that the company’s OTC product trading has grown rapidly, becoming one of the main sources of commission income. Among them, commissions from structured notes and OTC options have both surged over 100% year-on-year, with product trading volumes and the number of participating clients increasing by over 50% compared to 2024. In terms of cross-border, cross-asset, and cross-market one-stop services, the scale of the company’s client-held financial products has increased by 17.7% year-on-year to HKD 47.4 billion, with net income steadily rising.

Currently, the internationalization level of Chinese brokerages is gradually deepening, with their business regions extending from the initial Hong Kong to Southeast Asia, the Middle East, and even Europe and the United States. Of course, the application for overseas licenses and the establishment of teams will require relevant brokerages to invest further funds.

Strengthening Integrated Management of Domestic and Foreign Operations

As the business structure continues to transform and upgrade, the international business landscape of brokerages has further expanded, facing new challenges in management radius and talent development.

Securities Times reporters learned that due to regulatory requirements and business needs, more and more brokerages are implementing integrated management of domestic and foreign operations, developing in coordination with headquarters, no longer as in the past where Hong Kong subsidiaries had to “fend for themselves.”

On the one hand, regulators, considering risk control, require brokerages to optimize the management structure and capital utilization authorization systems for their subsidiaries. The China Securities Association has also required securities companies to improve their consolidated management structures and models, strengthen “vertical” management of subsidiaries and business lines, and enhance risk management capabilities to prevent financial risks from spreading across regions, markets, and borders.

From the development history of brokerages’ overseas businesses, individual risk events often have significant impacts on the domestic parent companies, as risks arising from asset mismatches and disorderly expansions ultimately fall back on the domestic parent companies. Therefore, last year, leading brokerages such as CICC, CITIC Securities, Huatai Securities, Guotai Haitong, and CITIC Construction Investment took the lead in promoting the integration strategy between the mainland and Hong Kong, enhancing cross-border and cross-business collaboration.

On the other hand, based on the needs of business development, leading brokerages are committed to improving their full-chain product and trading service capabilities across borders, assets, and markets, collaborating with teams and businesses in both the mainland and Hong Kong has also become a necessity.

Since the second half of last year, Hong Kong IPO financing has been booming, with an increasing number of companies applying for listing, and some investment banks facing a shortage of personnel. Certain institutions have even been publicly criticized by the Hong Kong Securities and Futures Commission and the Stock Exchange of Hong Kong for “poorly produced” IPO application documents. However, some leading brokerages have effectively coordinated domestic and foreign teams, preemptively addressing personnel shortages.

Additionally, more and more brokerages have also stationed senior executives from headquarters in Hong Kong or have executives overseeing mainland institutional business simultaneously manage Hong Kong subsidiaries, seeking better integrated and coordinated development.

It is understood that a leading brokerage achieved several times growth in its asset management business scale in Hong Kong last year, and the company’s head, who originally resided in the mainland, has been officially stationed in Hong Kong this year to promote team building and strengthen talent reserves.