JPMorgan Gets Nod for Majority-Owned Securities Business in China

UBS was the first foreign brokerage approved by the securities regulator to upgrade its ownership in a local joint venture.

JPMorgan Chase has received final regulatory approval to launch its majority-owned joint venture in China, as authorities in the mainland push ahead with their promise to open the country’s financial system.

The US bank will team up with an undisclosed minority Chinese partner to create the new company that will operate asset management, brokerage, investment consulting, and proprietary trading businesses.

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

Having originally applied for this permission in May 2018, JPMorgan has become the fourth global lender and first US bank to take full advantage of Beijing’s latest commitment to ease foreign-ownership restrictions.

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China allows full foreign ownership next year

Ahead of Chinese plans to eventually allow foreigners full control in 2020, Japanese brokerage Nomura Holdings received the regulatory nod to set up its own venture in March this year. Goldman Sachs also applied to take majority stakes and full ownership of their local operations.

UBS was the first foreign-controlled brokerage approved by the securities regulator to upgrade its ownership in a local joint venture to controlling stake since the mitigated rules were implemented in late 2017. The Swiss bank applied to raise the stake in its China venture, called UBS Securities, to 51 percent, up from the previous 25 percent.

China has repeatedly pledged to open its $40 trillion financial markets, including allowing foreign firms to own as much as 51 percent of their securities ventures, up from the current 49 percent ceiling.

Other global investment banks, including Morgan Stanley, also seek a controlling stake in its Chinese business under new rules. Having spent years operating with limitations, where they were not authorized to surpass a 49 percent limit, many banks signaled a desire to take majority stakes in their Chinese ventures in order to expand their mainland’s business.

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