Standard Chartered sets up wholly-owned brokerage arm in China

UK-headquartered bank Standard Chartered said its Hong Kong arm has been granted an in-principle approval for a brokerage license from the China Securities Regulatory Commission (CSRC).

Standard Chartered Securities (China), which will have an initial capital injection of $155 million, will cover underwriting, asset management to asset-backed securities as well as own-account trading and brokerage services.

In a statement, the banking giant said its mainland securities arm was the first of its kind establishment of an onshore brokerage firm wholly owned by a foreign shareholder. Based in Beijing, the platform unit will also provide onshore and offshore clients with various solutions associated with Chinese capital markets.

Standard Chartered head of financial markets in Asia John Tan was appointed as chairman of the new brokerage business, while Grace Geng will be appointed as CEO-designate.

Geng said: “Standard Chartered Securities (China) Limited will have a unique business strategy and focus on fixed income businesses, which are the strengths of Standard Chartered Bank. Riding on the Bank’s international network, strong capacity in product innovation and structuring in fixed income area, as well as its full commitment to serving China’s capital markets, the Securities Firm will adopt a differentiated business model.”

“We are well-positioned to provide tailored financial solutions to our clients, connecting investors with high-quality onshore and offshore assets,” he added.

Standard Chartered has become the latest global bank to take advantage of Beijing’s commitment to ease foreign-ownership restrictions. UBS was the first foreign-controlled brokerage approved by the securities regulator to upgrade its ownership in a local joint venture to controlling stake since the mitigated rules were implemented in late 2017.

China has repeatedly pledged to open its financial markets, including allowing foreign firms to own as much as 51 percent of their securities ventures, up from the previous 49 percent ceiling.

Other global investment banks, including Morgan Stanley, also sought a bigger controlling stake in its Chinese business under the new rules. Having spent years operating with limitations, where they were not authorized to surpass a 49 percent limit, banks signaled a desire to fully control their Chinese ventures in order to expand their mainland’s business.

Securities firms in China, which are mostly dominated by state-owned banks, generate more than $100 billion in revenue a year, official data shows.

Chinese President Xi Jinping said that the nation would accelerate the opening up of its financial sector, including measures to facilitate foreign access to the Chinese insurance industry and easing restrictions for entry and expansion of foreign financial institutions.