China Approves JP Morgan, Nomura Securities Joint Ventures

JP Morgan and Nomura have been given regulatory approval to set up new majority owned securities joint ventures in China.

The CSRC (China Securities Regulatory Commission) has granted JP Morgan and Nomura approval to set up majority-owned securities joint ventures in China, reported Reuters.

Allowing foreign banks to own a controlling stake in securities joint ventures was a key part of China’s pledge last year to open up its domestic markets. UBS became the first to own a 51 percent majority stake in a domestic securities joint venture after it won CSRC approval last November.

HSBC also holds 51 percent of its securities business in China, but it does so under rules that allow Hong Kong-based companies special access.

In January, CSRC chairman Fang Xinghai said more approvals would be given over the following six months. And last week, it was reported that multiple regulators at the China Development Forum had indicated that foreign ownership limits in financial services would be further eased, including in the securities industry.

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JP Morgan and Nomura applied to set up new majority-controlled joint ventures in China last year, but unlike UBS, neither had securities joint ventures already operational. JP Morgan had sold a 33 percent ownership stake in a Chinese securities joint venture in 2016.

The new approval for JP Morgan will allow it to offer clients “a complete set of services and solutions” to its clients and strengthen its onshore China business, the bank said in a statement. It will partner with Shanghai Waigaoqiao Free Trade Zone Group and four other Chinese investment firms in the venture, according to a Caixin report.

Nomura said its China joint venture – planned with state-owned enterprises Shanghai Orient International and Shanghai Huangpu Investment – will initially focus on wealth management business, offering services to high-net-worth individuals, but that it would look to grow the business into a “full-fledged brokerage”.

> ALSO READ: China’s Securities Firms Under Pressure to Consolidate (2 Jan 2019)

Daiwa and Macquarie are also known to be seeking approval for majority owned securities joint ventures.

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