Shares of Guotai Junan International Securities Ltd. surged 19.23% on Wednesday after trading resumed, following the release of details for its merger with Haitong Securities to form China's largest brokerage firm.

The two companies announced the specifics of the share swap deal late on Wednesday, with Haitong shareholders receiving 0.62 shares of Guotai Junan for each share held. The swap ratio was roughly in line with market expectations, according to analysts at Citi.

Additionally, Guotai Junan plans an A-share placement worth up to 10 billion yuan ($1.4 billion) from its controlling shareholder Shanghai State-owned Asset Management. After the merger, Haitong Securities will be delisted, and the combined entity will overtake Citic Securities to become China's largest brokerage in terms of assets.

The merger is in line with Chinese policymakers' ambition to help a few securities firms lead the industry within the next five years and build two to three world-leading brokerages by 2035. The move is seen as part of efforts to consolidate the fragmented securities industry and create stronger, more competitive firms on the global stage.