(Yicai Global) June 19 -- J.P. Morgan announced today that it has received approval from the China Securities Regulatory Commission (CSRC) to increase its current stake in J.P. Morgan Futures to 100 percent from 49 percent, becoming the first wholly foreign-owned futures company.
The CSRC said on its website yesterday that it will continue to open the futures market wider and introduce more qualified foreign institutions.
"China's futures market has experienced notable growth in recent years. With the country's continued liberalization of its financial sector, we are committed to building out a world-class futures and options business in China that will support our global and local clients as their access to China's maturing futures market continues to increase," said David Martin, Head of Global Clearing for Asia Pacific at J.P. Morgan.
Shenzhen Wallace Rand Equity Investment Fund Management previously held a 50 percent stake in the joint venture company, J.P. Morgan Broking Hong Kong had 49 percent, and the rest was in the hands of Jiangsu Weiwang Venture Capital. J.P. Morgan Broking Hong Kong will take full control of the futures unit after the shareholding change.
Mark Leung, CEO of J.P. Morgan China, said: "China represents one of the most exciting opportunities for many of our clients and our firm. We are aiming to have our full suite of global products and services to be delivered on the ground in China one day, and this latest development provides a fantastic opportunity for the firm and will enable us to further strengthen our onshore business capabilities in this critical market.”
China had 149 futures companies by the end of 2019. They posted total revenue of CNY27.6 billion (USD3.9 billion) and net profit of CNY6.05 billion last year, with the latter dropping 4.92 percent over the previous year, according to the China Futures Association. The overall scale of the business has grown rapidly since the year's start and the sector's margin is close to CNY600 billion, with growth surpassing 20 percent since this year.
Goldman Sachs Gao Hua Securities has a majority-owned subsidiary Qian Kun Futures. Goldman Sachs got the nod to raise its shareholding in its China securities joint venture to 51 percent in March. It will relocate all business and management departments operating in Gaohua Securities to Goldman Sachs Gao Hua Securities as soon as possible, the firm said then. Goldman Sachs will gain its futures license under Gao Hua Securities.
UBS Securities, the first foreign-owned joint venture securities company in China, also has its wholly-owned unit UBS Futures. The UBS Group officially controlled UBS Securities, with a 51 percent stake on Dec. 24, 2018.
Editor: Ben Armour