China Securities Industry has become an important part of China capital market and even after over decades development of the Chinese economy。This thesis has gained access to the most updated and completed Securities Industry Data via WIND information system；it has also overcome the shortcomings of the previous researches which have only analyzed the data of top 20 companies in the Securities Industry before 2004.Through CRn，HI Index and Gini Co-efficient，this paper has investigated the general China Securities Industry market structure。The result is that the general China Securities Industry is at relatively low concentration level from the aspects of the general asset，income and profits。Moreover，the variation of different indexes is basically reaching unanimity。
The securities market highly affects the concentration of the securities industry。When the market is booming，the concentration level decreases；when the market is depressing，the concentration level rises and its asset concentration is in accordance with its income concentration either the absolute value or the variations。This is largely due to the reason that the main asset scales of China securities companies match its scales of the operation department，nevertheless most of the income of China securities companies comes from its brokerage business profit，hence the asset has the tend to be the same as the income in their concentration level。However the absolute value of the profit concentration was higher than the concentration of both the asset and the income during the year 2002 to 2005，which means some companies were highly profitable。Their operation benefit has been over their asset scale which is apparent when the market is depressing。Moreover when the market is prosperous，the performance differences among different companies are not very big which results in the decrease of profit concentration during the year 2006 to 2007.
Since the main income and profit sources of China Securities Industry are the Securities Underwriting Business and the Brokerage，in order to investigate into further the industry’s market structure，this paper has also studied the concentration level in their main business area of Securities Underwriting business and Brokerage business。The result is that its underwriting business has a fluctuating concentration，and tend to increase remarkably。The difference of the Securities Underwriting Business concentration between China and the developed countries has been reduced。Various indexes of 2007 have reached an appropriate concentration。The important reason behind current market structure is that the Securities Offering system determining the Securities Underwriting Business development has reformed significantly，the Quota Control system has changed to Approving system，the Pathway system of main underwriter has changed to Sponsor System，the system’s significant change has improved the marketing of the Securities Underwriting Business，brokers have demonstrated their different capability on the underwriting business，the underwriting business has clearer differentiation，big brokers have increased their market shares gradually each year。
The general China Securities Industry and its brokerage business are at low concentration level with small fluctuation。The important reason behind the current market structure is that the Securities Industry has been strictly regulated。The Securities Brokerage business mostly relies on the securities business department，as China has strict regulation with regards to setting up the securities business department of the securities company，the numbers of securities business department has not increased accordingly with the speedy expansion of the securitise market，directly resulting in the low concentration of the brokerage business。
China Securities Industry has low market concentration all the time concerning its various indexes。Although there are certain changes among them at a time，generally，the minority dominates the market。One of the main reasons for such market structure is that there is strict access authorization system to the Securities Industry，so there are only a few numbers of the securities company in the industry；especially not many business departments exist who place a decisive role in the brokerage business。
Over a long period of the time，the relatively stagnant approval system has prevented the brokers from expanding their business through increasing the numbers of the business department，the securities market has been under the control of the small minority group。Secondly，it requests that any change of the business area of the securities company shall be approved by the supervision administration。The supervision administration at present inspects toughly all the innovation business，in the areas such as margin requirements，warrant seting up，direct investment，collecting of finacing，etc。It has to reply on the brokerage business and the underwriting business。The business structures highly resemble each other with little efficient market competition and few improvement of market concentration。Thirdly，the securities company can not efficiently operate their cautious regulating system；it has even aided those brokers who are in difficult financial situation after breaching the law。The securities companies can not withdraw from the market as usual；it stops the market competition system from functioning well。Fourthly，the pricing regulating system such as the price alliance under the support of the regulating administration can not improve the market concentration。Fifthly，the little information disclosure of the brokers and the poor business monitoring has resulted in weak supervision system。
Based on the massive cases study，this paper has deeply probed the market practice of the Securities Industry。It finds that China securities cmpanies act differently in the market of underwriting and brokerage business。They compete viciously on prices over a period of time after the cancellation of the commission regulation。The commission has increased largely thanks to the effective operation of the commission rate alliance liaised and led by the Securities Association of China；it also maintained at a relatively high level。On the other hand，in the field of the underwriting business，due to the regulating of the underwriting commission price and the reform of the issuing system，the competition is healthy。Some sponsors with many representatives and capable of the price enquiry in underwriting business emerge out gradually with their advantages，not only taking over many underwriting projects，but also charging higher price in the industry。Whereas some sponsors with only four representatives have no business even they charge low，they are being forced out of the business step by step by the market。
The product（service）innovation of Securities Industry focuses on the underwriting business。Along with the launch of the price enquiry system and the acquisition management strategy of the listed companies，more innovation has come out of the areas of equity division reform，marketization of the IPO pricing，merger and acquisition reorganization scheme in stock market，etc。The administration authorities always lead the merger and acquisition of the securities industry，mainly merging those brokers of poor performance，or reorganizing them with the capital injection from the Central Huijin and China Jianyin Investment company，or proceeding the management consignment to the risk brokers from those of same business。Foreign capital’s merger and acquisition to the domestic brokers mostly come from the finance investors。However due to the reason that UBS and Goldman Sachs Securities saved the brokers who were in the financial crisis，they have gained the actual control over the joint venture brokers。Through some relative case studies，this paper has also probed the infringement of the brokers。We find that the broker’s marketing behavior has been negatively affected under currently strict regulation，the Quasi-price regulating has great impact on the business of the brokers who can not carry out the effective marketing competition，other business innovation activities have also been restricted。
The merger and acquisition is restricted to the administrative restructuring and high-risk broker reorganization。Insufficient regulation of the Securities Industry has led to their risk collection and explosion。
With the setting up the time series econometrics model between the amounts of fund raising from China securities market and Chinese GDP from 1992 to 2007，this paper has tested the external performance of the Securities Industry。This model has passed the ADF test and the Co-integration among the variables；it has set up the Error Correction Model。According to Granger Test of Causality，the amount of fund-raising in the stock market will speed up the economy development in both short term and long term，but the effect is more significant in long term aspect。It concludes that China Securities Industry shows characteristics of a relatively strong positive externality。After studying the performance change of China Securities Industry and the comparison with the same industry companies of foreign countries over recent 10 years，we argue that the China Securities Industry has not achieved high performance with big fluctuation。
It is because its brokerage business has taken large percentage of the whole industry，while its concentration is low，additionally its business structure’s shortcoming has affected the performance in the industry。After the qualitative analysis of the relation between the structure and behavior，behavior and performance，the paper states that there is certain phenomenon which is opposite to the regular theory between the market structure and behavior，all of which have related to the Securities Industry regulation。Based on the above analysis，by setting up the econometrics model between the market structure and its performance，it points out that China Securities Industry conforms to the amended ES hypothesis；it proves the operating efficiency is one of the important factors to determine the brokers’performance。Meanwhile，the Securities Industry regulation has also affected the mechanism among structure，behavior and the efficiency。
In line with analysis of the regulation status of China Securities Industry，this paper has investigated the phenomena in China Securities Industry which includes power rent-seeking under strict approving system and business scope regulating，imperfect pricing，protective and cautious regulation。They have involved themselves too much in the market which has distorted the market regulation，and affected the flexibility and efficiency of broker’s operation。On the other hand，the administration and the legal implementation do not work well，in lack of sustained and dynamic supervision。Additionally the securities association and the securities exchange can not self-discipline which leads to poor supervision。
Combining the American-British Securities Industry’s regulating and their securities industry development under current financial crisis，it holds that American Securities industry is superior to China Securities Industry in the aspects of market structure，behavior and performance。Even though the financial crisis has signicant impact on the American economy，its market concentration is high with sufficient market competition and lots of innovation activity，their industry is relatively efficient and performs well。Both America and Britain have rigorous supervision system，however their existing problems caused the financial crisis this time。After the crisis broke out，the two countries both adopted some measures to disclose the information more transparently。It has certain positive indication for the China Securities Industry reform。
Based on the above analysis，this paper proposes the system arrangement and the strategic policy to promote China Securities Industry development。It holds that it is necessary to enhance the supervision over the regulating authorities，improve the procedure transparency of the supervision activities，cut off the interest liaison between the supervision authority and securities company as well，in the same time pay attention to the appropriation of the supervision。It suggests the regulations offering an easy industry access，standardizing the business territory，meanwhile perfecting the withdrawal system of securities companies and its pricing regulating means。By increasing the information transparency，it strengthens the risk management index system，reinforces the organization’s legal implementation on law-breaching，enhances the risk management control and the industry’s self discipline。
Key words：China Securities Industry Industrial Organization Regulation
