Morgan Stanley, a major US multinational investment bank, announced plans to increase its stake in its brokerage joint venture in China to 94%. An exchange filing showed the bank’s plan on Wednesday, December 29. The announcement set Morgan Stanley on track to take full ownership of the brokerage business.

The US bank plans to inject 998 million yuan ($110 million) to boost the registered capital of the brokerage joint venture firm. The brokerage business is a joint venture established by Morgan Stanley and China Fortune Securities company in 2011. That is according to an  exchange  Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term filing by China Fortune.

On Wednesday, China Fortune, a Shanghai-based state-owned company, stated that it decided not to inject funds into the brokerage joint venture company. The move, therefore, reduced its ownership to 5.94% from the previous 10%.

However, the changes still require approval from the China Securities Regulatory Commission (CSRC) and other government authorities.

In July, Morgan Stanley acquired 39% of the joint venture from China Fortune and therefore increased its ownership to 90%. As a result, the Wall Street bank rebranded the joint business venture as Morgan Stanley Securities China Co Ltd. The major US bank has had a presence in China since 1993 and received approval to establish the securities joint venture in December 2020.

Why Foreign Banks Are Expanding in China

The development by Morgan Stanley comes at a time when global banks and asset management firms have been racing to boost their stakes in their Chinese joint ventures since China allowed foreign-majority ownership in the financial services sector in 2019. As a result, multiple foreign lenders are eyeing a bigger presence in mainland China. Particularly, global banks are targeting the location to increase their income within the Greater Bay Area in the country. The Greater Bay Area is the economic and business  hub  Hub A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method used by cryptocurrency exchanges. This method provides transparency and allows traders to see the depth of the market. It also allows for more competitive pricing because there is no trading desk and no price manipulation. The disadvantage of this type of platform is that sudden market volatility can shift all traders to one side of the market or the other. There can be all buys and no seller or all sellers and no buyers. Liquidity Hubs ExplainedThis leads us to a liquidity hub, which platforms and brokers use to process each trade on their platform. When many liquidity providers join together to form a liquidity hub, they can also process trades whether they are more buys then sellers or vice versa. Deals can be processed faster for lower costs. Liquidity hubs allow brokers to deliver tight spreads into their traders and execute client orders at the best available prices from multiple liquidity providers. Liquidity hubs are traditionally hosted in premier data centers with a high concentration of trading participants such as Hong Kong, Chicago, or New York. These hub services provide full redundancies on the equipment and network supporting them, including the international pipe to primary and secondary data centers. A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method used by cryptocurrency exchanges. This method provides transparency and allows traders to see the depth of the market. It also allows for more competitive pricing because there is no trading desk and no price manipulation. The disadvantage of this type of platform is that sudden market volatility can shift all traders to one side of the market or the other. There can be all buys and no seller or all sellers and no buyers. Liquidity Hubs ExplainedThis leads us to a liquidity hub, which platforms and brokers use to process each trade on their platform. When many liquidity providers join together to form a liquidity hub, they can also process trades whether they are more buys then sellers or vice versa. Deals can be processed faster for lower costs. Liquidity hubs allow brokers to deliver tight spreads into their traders and execute client orders at the best available prices from multiple liquidity providers. Liquidity hubs are traditionally hosted in premier data centers with a high concentration of trading participants such as Hong Kong, Chicago, or New York. These hub services provide full redundancies on the equipment and network supporting them, including the international pipe to primary and secondary data centers. Read this Term that links China’s major cities, which include Hong Kong, Macau, Shenzhen, Zhongshan, Huizhou, Zhaoqing, Foshan, Guangzhou, Dongguan, Jiangmen and Zhuhai. Two years ago, the region boasted a gross domestic product of US$1.7 trillion and hosted a population of 72 million people.

In June, Goldman Sachs announced plans to establish a wealth management joint venture with the state-owned Industrial and Commercial Bank of China. In March, Swiss investment bank Credit Suisse Group AG revealed its plans to triple the number of its staff in mainland China over the next three years. In November 2020, JPMorgan Chase acquired 71% of its Chinese securities joint venture after it completed the transaction to purchase a 20% stake from one of its local partners. Last month, CitiGroup applied for a securities license in China as the US-based bank seeks to expand its presence in the world’s second-largest economy.