(Yicai Global) Aug. 15 -- The China Securities Regulatory Commission released this year's ratings for brokerages, lowering the grades of 29 of them from last year. Southwest Securities dropped from A to C, falling six levels.

Securities companies' classifications are not simply a representation of their credit status and levels and are based on comprehensive evaluations made by the securities regulatory department of the firm's risk management ability, market competitiveness and compliance management level, the CSRC said. The results mainly show overall situations of securities companies' compliance management and risk control.

Securities companies are divided to 11 levels in five categories -- A (AAA, AA, A), B (BBB, BB, B), C (CCC, CC, C), D and E. Companies in categories A, B and C are operating normally. The category and level only show risk management ability and compliance management level of a group. The potential risk of groups in categories D and E may exceed the tolerance range and they should adopt risk mitigation measures according to the law.

Among 129 companies, none got an AAA rating, 11 were AA level. CITIC Securities Co.[SHA:600030], GF Securities Co. [SHE:000776], Huatai Securities Co. [SHA:601688] and Haitong Securities Co. [SHA:600837] rose from BBB to AA, while Galaxy Securities Co. [SHA601881], Zhongtai Securities Co., China International Capital Corp. and Huarong Securities Co. were upgraded from A to AA.

Founder Securities Co. [SHA:601901] held its position with a C rating. Cinda Securities Co., Hengtai Securities Co. and China Investment Securities Co. fell from A to CC, CCC and CC, respectively.

For the bond underwriting business in fixed income departments, downgrades may cause some hot bonds to lose underwriting qualifications, and brokers relying on bond sales may be severely affected by these losses, market participants said.

A brokerage's rating directly affects its rate for paying into the investor protection fund. Southwest Securities only needed to pay 1 percent of its income into the investor protection fund last year, while this year it needs to pay 3 percent. This will greatly impact Southwest Securities' net profits for the year.