China Post Securities: New regulations define a new competitive threshold for the industry, leading to a reassessment of the securities industry's value under compliance restructuring.

Zhongyou Securities released a research report stating that this new regulation is not merely a short-term disruption in the industry, but a supply-side reform that fundamentally reshapes the value logic of the bond investment advisory industry. As the official implementation date in February 2027 approaches, the compliance barriers, scale advantages, and collaborative value of leading brokerage firms will gradually be realized. It is recommended to prioritize brokerage firms that have already completed the construction of business isolation systems and have conducted flawless pre-regulatory inspections, as these institutions can directly engage with new clients during the transition period. Additionally, attention can be given to brokerage firms with mature cross-business line collaboration mechanisms and successfully running closed data loops, as their investment advisory business is likely to see marginal growth elasticity far exceeding the industry average. It is also advisable to pay appropriate attention to distinctive brokerage firms deeply bound to local small and medium-sized bank resources, as they possess irreplaceable localized service advantages in county markets and can benefit from the release of demand for outsourced investment advisory services in lower-tier markets. The main points of Zhongyou Securities are as follows: Event Review On August 7, 2026, the China Securities Association issued a notice to strengthen self-regulation management of securities companies' bond investment advisory business, standardize the operations and services of bond investment advisors, and prevent conflicts of interest and operational risks between bond investment advisory business and related operations. The association researched and formulated the "Management Rules for Securities Companies' Bond Investment Advisory Business," which consists of 6 chapters and 44 articles covering six major modules: General Principles, Business Management, Risk and Compliance Management, Personnel Management, Self-Regulation Management, and Supplementary Provisions, achieving comprehensive rule coverage of the bond investment advisory business. The "Management Rules" set a transition period of 6 months and will officially take effect on February 5, 2027. The rules explicitly establish five core rigid constraints, which directly define new competition thresholds for the industry. 1. **Entry Qualification Hard Threshold**: Businesses must meet clear requirements of 3 full-time advisors with more than 2 years of research experience + 1 full-time compliance staff with more than 2 years of experience + a dedicated business system with full-process traceability, effectively eliminating the rough expansion model of small teams with light assets in small and medium-sized institutions and raising qualification standards for industry participants to a unified high level. 2. **Concentration Risk Red Line**: In principle, investment suggestions must not result in any single client holding more than 25% of a single bond; exemptions apply only to certain situations such as low-risk instruments like government bonds and new accounts in the first three months, completely blocking the speculative path that relied on concentrated single-bond holdings for arbitrage and driving the industry back to the essence of asset allocation. 3. **Entire Chain Isolation Mechanism**: Investment advisory, underwriting, self-operated, and asset management businesses must be isolated in personnel, systems, and office spaces, prohibiting senior management from directly participating in specific investment decisions related to conflicting businesses, effectively severing the transmission chain of risk related to profit transfers at an institutional level. 4. **Performance Assessment Hard Constraints**: It is explicitly prohibited to use clients' excess returns as a core assessment criteria for investment advisors, with focus shifted to compliance with operational practices and customer satisfaction, forcing the industry to change its assessment orientation from "expanding scale for quick profits" to "emphasizing quality for long-term growth." 5. **Full-Process Traceability Requirement**: All business documents must be archived for no less than 5 years from the termination of agreements, covering all aspects from investment suggestion approval to client follow-up and transaction monitoring, significantly increasing the costs of violations. The implementation of these rules will drive three irreversible industry clearing effects. The first is that the cost-side scale advantages may widen the gap. Leading brokerage firms can centralize investments to build compliant intelligent systems that keep compliance costs per client within the breakeven line, while small and medium-sized institutions, limited by revenue scale, may face negative marginal returns on compliance investments, gradually falling into a dilemma of compliance not generating profit, non-compliance leading to violations. The second is that the professional pricing power may shift in terms of capability. When concentration constraints mandate the dispersal of risk and profit commitments are completely prohibited, depth of credit research, portfolio configuration capability, and granularity of compliance services will become core indicators for clients in choosing institutions, with leading brokerage firms possessing well-established research systems more likely to achieve significant service fee premiums. The third is the safe release of collaborative value. Under the compliance framework of isolation walls, client risk appetite data and bond allocation demand profiles accumulated in investment advisory businesses can empower product matching for retail wealth and forecast new bond demand for investment banking once desensitized authorization is obtained, thereby constructing a cross-business growth flywheel under a compliant closed loop; leading full-licensed brokerage firms are likely to be the first to realize the value of collaboration. Risk Warning: Subsequent transactions may not sustain high levels, and the market correction may exceed expectations.