First stress tests on brokerages

SHANGHAI: , China is preparing to conduct its first-ever stress test on the brokerage industry this year to ward off potential risks arising from a possible deterioration in the economic or market environment, according to three sources with direct knowledge of the plans.

China's securities watchdog had already urged select brokerages including China International Capital Corp to conduct a pilot test, and the programme was expected to be launched industry-wide in the second half, said the sources, who declined to be identified because the information is not public.

The planned stress tests by the China Securities Regulatory Commission come at a time when Beijing is walking a tightrope in taming inflation without hitting the brakes on growth too hard, but some analysts said the move had little to do with current economic difficulties or market sluggishness.

Instead, it was part of broader efforts to improve risk management in the financial sector, following similar moves by the banking regulator in recent years, they said. Reuters