Beijing expands market access to Macau, HK brokers

The China Securities Regulatory Commission (CSRC) has revealed that qualified institutions from Macau and Hong Kong will be allowed to establish one fully licensed securities house in Shanghai, Shenzhen or throughout Guangdong province, FinanceAsia reported.
An announcement published on CSRC’s website indicated that China is opening its capital markets to both SARs’ brokerages by allowing qualified firms to form joint ventures with their mainland peers.
According to Finance Asia, any fully licensed Hong Kong and Macau joint venture broker can participate in the range of financial services on the onshore capital market, including stock broking, IPO underwriting, and wealth management. Furthermore, Macau and Hong Kong brokerages will be able to own up to a 51 percent stake of the joint venture, which could grant them controlling interest and more say in the firms’ operations.
In China’s pilot reform zones, qualified financial institutions from Macau and Hong Kong are allowed to set up fully licensed brokerages and own up to a 49 percent stake.
Moreover, joint venture brokerages from the SARs will no longer be required to have one mainland Chinese shareholder.
Market observers agree that the new regulations showcase the willingness of Chinese regulators to liberalize the domestic securities industry, however, they acknowledged that the impact will most likely be limited.
“The advantage brought by [Chinese] brokers’ license has lost its glory due to China’s [booming] Internet finance,” the executive of a large Chinese securities house told Caixin, a mainland media outlet.
A Hong Kong-based portfolio manager at a large Chinese securities firm told FinanceAsia that brokers from both SARs might still want “to have a slice” of China’s large markets despite the current market volatility. CP