Shanghai Liberalizes Regulations on Operations of Foreign Banks, Rating Agencies in Its Free Trade Zone
Xu Huiyun
/SOURCE : Yicai
Shanghai Liberalizes Regulations on Operations of Foreign Banks, Rating Agencies in Its Free Trade Zone

(Yicai Global) June 29 -- Shanghai has released new guidelines for China's first negative list in the financial services sector operating in the city's free trade zone (FTZ), aiming to enhance transparency in and opening up of the sector and to provide policy guidance for foreign investment and operations. Shanghai authorities have shortened the negative list for the FTZ, providing a wider operating space for foreign firms.

Under the new guideline and shortened negative list for China (Shanghai) Pilot Free Trade Zone, foreign banks can now sell and underwrite government bonds in the Shanghai FTZ. "There is also no restriction for international ratings agencies to carry out their business in the Shanghai free trade zone. There is now no mandatory review or approval for transactions by foreign insurers in the zone," said Shanghai FTZ on its website. However, foreign banks are still barred to be engaged in payment and bank card business in the FTZ.

The Management Committee of China (Shanghai) Pilot Free Trade Zone and Shanghai Municipal Financial Services Office jointly held a press conference yesterday to release the new guidelines. They said efforts will be made to continue to expand the opening up of the financial sector and actively introduce more financial liberalization measures in Shanghai.

At present, more than 70 countries and regions in the world have adopted the "pre-entry national treatment and negative list" management model, said Li Jun, deputy director of Shanghai Municipal Financial Services Office. "Negative list has increasingly become one of the important tools for the implementation of financial macro-prudential supervision."

On the basis of 2017 Negative List of Shanghai Free Trade Zone, the new guidelines cover 48 special management measures. It sets out the conditions and requirements for foreign capital entering the financial sector and summarizes the provisions concerning foreign capital's access to the financial field, facilitating foreign investors' understanding of China's financial industry and regulations.

The 48 special management measures are listed under two categories, namely, the management on foreign investment in the establishment of financial institutions (market access restrictions), and business management after foreign capital's access (national restrictions).

Shanghai Municipal Financial Services Office said the government will introduce more financial liberalization measures to enhance opening up of Shanghai's financial sector and attract more foreign financial institutions to settle in the city. Shanghai government will also make increased efforts to implement more financial innovation pilot projects in Shanghai.

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Keywords: Shanghai , Free Trade Zone , FTZ , Financial Reform , SERVICES , Foreign Investment , ENVIRONMENT , Negative List , Policy Paper , Municipal