(Yicai Global) Aug. 27 -- Fifteen Chinese brokerages were granted AA status by the country's securities regulator in its 2020 ratings released today. This is five more than last year and includes six newcomers, such as Shenzhen-based Essence Securities which showed the most improvement, moving up from BBB last year.

This year's review focused more on compliance and risk control, the level of professional services and differentiated development, the Securities Times reported, citing an industry insider.

The China Securities Regulatory Commission gave some of the smaller brokerage firms extra points for wealth management, customer service and financial advisory services to encourage differentiated development. As a result, many small and medium-sized brokerages did well. Hengtai Securities and Changjiang Securities were promoted to A from CCC and Dongguan Securities moved up to A from B.

The biggest mover was Guorong Securities which jumped five places from C last year to BBB this year. UBS Securities, a Chinese brokerage affiliated to Swiss investment bank UBS, was elevated to an A rating from BBB last year.

The classification is not an evaluation of the credit status of a brokerage, but rather takes into consideration the company's governance structure, internal controls, compliance management and risk controls. It also looks at the firm's market competitiveness, return on net capital and handling of expenses.

The ranking is used by the CSRC to determine regulatory resource allocation such as on-site and off-site inspections, the regulator said.

If a securities firm is found to have violated regulations it will have points deducted. Zhongshan Securities, for example, was dropped from a BBB ranking to a CCC grade due to corporate governance and internal management issues.

Editor: Kim Taylor