Economy Mar 13

China set to allow foreign ownership of securities firms 

Regulator to lift restrictions on foreign investment in securities companies from April 1

China set to allow foreign ownership of securities firms 
China says foreign investors can apply to set up securities companies from April 1. File photo of Shanghai market by AFP

By Chris Gill

(ATF) China’s Securities Regulatory Commission (CSRC) announced today that restrictions on foreign investment ratios in securities companies will be lifted from April 1, 2020.

Qualified foreign investors who comply with laws and regulations and meet relevant requirements of the Commission and service guidelines can submit an application in accordance with the law to establish a securities company – or change the actual controller of a relevant company, it said.

Today's announcement is eight months earlier than the date announced by Premier Li Kequiang in September 2018 on when full foreign ownership of securities companies would be permitted. 

In the next step, the CSRC said it would continue to firmly implement an opening up of China's financial markets, and promote access to its capital market and encourage joint ventures or wholly foreign-owned enterprises in accordance with the law.

The news follows an announcement by the People's Bank of China – the central bank – recently that it would lead a sweeping overhaul of the country's financial system so that it meets international norms.

In 2018, the commission began to allow some foreign financial entities to increase their minority stakes to a majority 51% in securities companies.

A cause of trade tension with the US was that many Chinese industries are closed to foreign firms or dominated by state-owned entities – making it difficult for American companies to compete on even ground with their Chinese counterparts.

But China has been keen to attract more foreign capital to its markets and help the local financial sector mature.

Local businesspeople said internationalising its markets would increase the country's international influence.