We provide securities and futures brokerage services to individual and institutional clients for the trading of listed stocks, funds, bonds, futures, financial derivatives and other financial products. We receive commissions primarily for executing and settling securities trades for our clients. In 2010, 2011 and 2012, the commission and fee income from our securities and futures brokerage business amounted to RMB6,066.9 million, RMB3,940.2 million and RMB3,070.0 million, respectively, representing 71.7%, 61.3% and 51.5% of our total revenue and other income, respectively. While the commission and fee income from our brokerage business decreased considerably in the above periods due to market conditions, our revenue decreased at a slower rate than that of the industry. Our net revenue from securities brokerage business ranked first among SAC member securities firms for five consecutive years beginning 2008. Our average securities brokerage commission rate in the PRC in 2010, 2011 and 2012 was 0.103%, 0.083% and 0.083%, respectively.

Wealth Management Services

As at December 31, 2012, we had approximately 190,000 high-end clients. We believe that our high-end clients have significant needs for investment and financing solutions, personalized wealth management products and risk management instruments, areas that represent an important source of potential revenue for us.

To meet the wealth management needs of our clients, we are rapidly transforming our conventional brokerage branches into wealth management centers that provide a comprehensive suite of brokerage and wealth management services. In addition to brokerage services, we also sell self-developed and third-party financial products through our brokerage branch network. The sale of our self-developed financial products grew rapidly. The market value of the self-developed financial products we sold grew from RMB1.99 billion as at December 31, 2010 to RMB1.80 billion as at December 31, 2011, and to RMB6.44 billion as at December 31, 2012. The amount of third-party financial products we sold increased from RMB6.09 billion in 2010 to RMB9.61 billion in 2011, and to RMB14.07 billion in 2012. Since the new regulation on agency sales of financial products was issued in November 2012, we have become qualified to engage in agency sales of financial products and are now able to offer a greater variety of third-party financial products. We intend to significantly expand the scale and diversity of third-party financial products we sell. We believe that our client base and branch network advantage, as well as our continuously diversified product portfolio, will provide strong support for the development of our wealth management services and help turn it into a new growth area of our business in the future.

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