Caixin
Dec 19, 2019 05:03 AM
FINANCE

JPMorgan Cleared for Majority-Owned Securities Venture in China

JPMorgan becomes the second foreign institutions to win a securities business license for its majority-owned China venture. Photo: VCG
JPMorgan becomes the second foreign institutions to win a securities business license for its majority-owned China venture. Photo: VCG

JPMorgan Chase & Co. won a business license for its 51%-owned securities venture in China, the American company said Wednesday, making it the second foreign company to initiate business through a majority-owned venture in the country.

The Wall Street bank said the new venture, JPMorgan Securities (China) Co. Ltd., has been licensed to conduct business including brokerage, investment advisory, underwriting and sponsorship.

The license was granted after more than a year of review and made JPMorgan the second foreign company approved to launch a majority-owned securities business in China after Japanese financial titan Nomura Holdings Inc. won approval in late November.

Both JPMorgan and Nomura won the go-ahead from China’s securities regulator in March to set up foreign-controlled securities joint ventures. The move followed Beijing’s decision to loosen the cap on foreign ownership in mainland-based securities joint ventures from 49% to 51% in April 2018. The limit on foreign ownership will be scrapped in 2020, Premier Li Keqiang said in July.

China is “a critical market for many of our domestic and global clients,” said Jamie Dimon, chairman and chief executive of JPMorgan. “We will continue to invest in and fully support our business in the country.”

With 800 million yuan ($114 million) of registered capital, Shanghai-based JPMorgan Securities (China) is 51% controlled by JPMorgan International Finance Ltd., a JPMorgan subsidiary. Chinese investors in the venture include Shanghai Waigaoqiao Free Trade Zone Group, Shenzhen Mailande Equity Investment Management Co. Ltd. and three other Chinese investment firms.

Caixin reported earlier that JPMorgan Securities (China) won approval from securities regulators for its top management team in September. Li Yi, the head of JPMorgan China who is known as David in English, has been appointed as the chairman of the new venture.

Liu Hong, chairman of Shanghai-listed Shanghai Waigaoqiao Free Trade Zone Group Co. Ltd., will be a vice chairman of JPMorgan Securities (China). Shanghai Waigaoqiao is the second-largest shareholder of JPMorgan Securities (China) with a 20% stake.

Despite trade tensions, U.S. financial institutions have not been slow to tap into China's financial services market. In August, American investment bank Morgan Stanley said it was close to acquiring a 2% stake from Chinese partner Huaxin Securities to take a controlling interest in its Chinese securities joint venture. JPMorgan also confirmed in August that it won a deal to make it the first foreign company to take control of a China-based fund management company.

Contact reporter Han Wei (weihan@caixin.com)

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