NAFMII Releases 2024 Market Assessment Results Highlighting Tiered Performance Among Banks and Securities Firms
The National Association of Financial Market Institutional Investors (NAFMII) has unveiled its 2024 market evaluation results for primary dealers in China’s interbank bond market, revealing significant performance disparities among financial institutions. The assessment, designed to enhance professional standards across the sector, evaluated dealers across multiple dimensions including value discovery, inclusive finance capabilities, innovation, and support for market opening.
National Banks Demonstrate Consistent Performance
Among 26 nationwide commercial banks assessed, seven institutions secured top-tier A ratings: Bank of China, CITIC Bank, China Merchants Bank, ICBC, Industrial Bank, SPDB, and Agricultural Bank of China. Seventeen banks including China Construction Bank, Bank of Communications, and China Minsheng Bank received B ratings, while Agricultural Development Bank of China and BNP Paribas (China) Ltd. were graded C.
Industry analysts note these evaluations carry substantial consequences, directly impacting institutions’ operational permissions and market reputation. “The standardized evaluation mechanism has become a crucial tool for improving dealer capabilities and maintaining market discipline,” commented a fixed-income analyst at a major Shanghai securities firm.
Regional Banks Show Geographic Disparities
The assessment of 28 regional banks revealed striking performance gaps, with eastern coastal institutions outperforming their inland counterparts. Five regional banks—Bank of Ningbo, Bank of Jiangsu, Bank of Hangzhou, Huishang Bank, and Bank of Qingdao—earned A ratings, demonstrating strong underwriting competencies.
Conversely, Jiangxi Bank, Jilin Bank, and Dongguan Rural Commercial Bank received D ratings, the lowest tier, exposing deficiencies in governance and underwriting capabilities that require immediate remediation. NAFMII regulations stipulate that institutions receiving D ratings for two consecutive years will lose their primary dealer qualifications.
Securities Firms Exhibit Polarized Performance
Eighteen securities companies participated in the evaluation, with industry leaders CITIC Securities, CICC, Guotai Junan, Haitong Securities, CITIC Construction Securities, and China Merchants Securities maintaining their A-grade positions. Ten firms including Everbright Securities, GF Securities, and Huatai Securities were rated B, while Dongxing Securities, Changjiang Securities, and Industrial Securities received C ratings—highlighting persistent stratification within the securities sector.
Four-Dimensional Competency Assessment
NAFMII introduced a comprehensive evaluation framework measuring four critical capabilities:
Value Discovery Proficiency
Top performers included CITIC Construction Securities, ICBC, CITIC Securities, China Merchants Bank, and CITIC Bank—institutions demonstrating exceptional pricing accuracy and market analysis capabilities.
Inclusive Finance Capacity
Bank of China, CICC, China Merchants Bank, CITIC Bank, and China Zheshang Bank led in serving small and medium enterprises and underrepresented market segments.
Innovation Capabilities
CITIC Bank, Industrial Bank, China Merchants Bank, Bank of China, and China Everbright Bank were recognized for pioneering financial products and services.
Market Opening Support
Bank of China, ICBC, China Merchants Bank, Industrial Bank, and CITIC Securities excelled in facilitating international participation in China’s bond markets.
Regulatory Framework Intensifies
The evaluation follows NAFMII’s October 2023 revisions to the “Market Evaluation Rules for Members Engaged in Non-Financial Enterprise Debt Financing Instrument Underwriting,” which introduced stricter compliance requirements. Key changes include:
- Establishment of a D rating tier for underperforming institutions
- Mandatory two-year suspension for repeat D-rated dealers
- Enhanced evaluation frequency and transparency measures
- Clearer metrics linking evaluation outcomes to business scope
“The revised rules create necessary market discipline,” noted a Beijing-based regulatory affairs specialist. “By weeding out consistently underperforming dealers, the system incentivizes all participants to elevate their professional standards.”
Market Implications and Strategic Responses
The evaluation results are already influencing institutional behavior across several dimensions:
Capital Allocation Strategies
Top-rated dealers report increased allocation from institutional investors, while lower-rated firms face growing pressure to demonstrate improvement.
Talent Recruitment Trends
A-rated institutions are leveraging their standings to attract top underwriting talent, particularly specialists in green bonds and cross-border products.
Technology Investments
Several B-rated banks have announced digital transformation initiatives to enhance pricing models and deal execution capabilities.
International Collaboration
Dealers strong in market opening support are forming strategic partnerships with global custodians and index providers.
Future Outlook
Market participants anticipate several developments following the evaluation:
- Tighter Performance Gaps: Lower-tier institutions will likely accelerate improvement initiatives to avoid business restrictions
- Specialization Trends: Dealers may increasingly focus on niche capabilities to distinguish themselves
- Consolidation Pressures: Smaller regional banks could seek mergers or partnerships to enhance competencies
- Innovation Push: The emphasis on innovation capabilities should drive new product development
As China’s bond market continues its rapid expansion—with outstanding debt surpassing $20 trillion—NAFMII’s evaluation system appears poised to play an increasingly important role in maintaining market quality and stability. The transparent performance benchmarking provides both carrots and sticks to ensure primary dealers meet the growing sophistication demands of China’s financial markets.
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