Changjiang Securities, the Wuhan-based brokerage heavyweight, has regulatory approval to establish 32 new outlets across the country, doubling its original number of outlets.

Twenty-six of the new outlets, based on assets the brokerage took over from bankrupt China Eagle Securities earlier this year, kicked off operations Monday.

The other 6 outlets will be established within 2 years.

Changjiang Securities took over the securities assets of China Eagle Securities and all the latter's staff in the brokering business.

"Another 32 outlets are of great strategic significance to us," said Li Geping, president of Changjiang Securities.

China currently has 111 securities firms, with most facing difficulties due to long-term market sluggishness and a lack of risk control systems. The market watchdog China Securities Regulatory Commission (CSRC) has undertaken a high-profile and tough program; it has already closed many securities firms that are not up to scratch.

In 2004, 13 brokerages were punished by the CSRC due to irregularities.

So far, about 21 securities companies, including former market heavyweight China Southern Securities, have been closed down or taken over because of embezzlement of clients' guaranteed funds.

The Shenzhen-based China Eagle Securities was found to have had serious malpractices and was shut down by CSRC in January this year.

It had misappropriated about 90 percent of its client funds.

According to the Securities Association of China, the total losses of 114 brokers last year was about 15 billion yuan (US$1.85 billion), the fourth consecutive tough year for China's securities companies.

Experts say China has too many brokerages and more than half of them should be forced out of the market or alternatively, merge with healthier ones.

Changjiang Securities said it had been doing a lot to try to improve its risk-control system and financial services.

But a lack of outlets was the biggest obstacle for expansion and the reason why its market position was not good enough, according to President Li.

Established 14 years ago with a registered capital of 2 billion yuan (US$248 million), Changjiang Securities is a national securities company with licenses in brokering, underwriting and proprietary trading.

In 2001 the brokerage set up a joint venture investment bank with BNP Paribas, the Euro zone's second largest bank in terms of market capitalization.

It was the first such case after China became a member of the WTO, attracting attention inside the industry.

Changjiang Securities has 36 shareholders including large enterprises like Haier Group Investment Development Co, which covers various industries.

(China Daily November 29, 2005)