US Investment bank JPMorgan Chase & Co has received approval from regulators to operate its futures business in China. The approval, which was given on Thursday, marks the start of operations of the country's first fully foreign-owned futures business.
JPMorgan initially sought to take full control of its Chinese futures joint venture company back in December. The company wanted to take advantage of China's push to open up its multi-trillion-dollar financial market to foreign firms. China had greatly eased its foreign investment policies, including the removal of foreign shareholding caps for local joint venture companies.
The bank had submitted an application to regulators requesting that it be allowed to purchase a 100 percent stake in its Chinese futures business in December. Prior to its stake purchase, 50 percent of the company was owned by Shenzhen Wallace Rand Equity Investment Fund Management Co, while the other 1 percent was owned by a local investment company in Jiangsu.
The regulatory approval for JPMorgan to begin its operations comes as tensions between China and the United States continue to escalate. Despite the two country's political and economic squabble, China is pushing ahead with its plans to invite foreign players into its lucrative markets, including US-based and US-owned companies.
China's futures industry is currently dominated by local players. JPMorgan's entry in the market is expected to generate competition and hopefully drive up innovation within the sector. In a statement posted on its website, the Chinese Securities and Regulatory Commission (CSRC) stated that it is expecting the latest approval to bring in more qualified foreign players in the country's various industries.
JPMorgan is one of many foreign-owned companies that are looking to take full control of their Chinese joint ventures. The New York-based investment bank recently made a number of stake purchases in its Chinese joint ventures, including its asset management joint venture with Shanghai International Trust.
JPMorgan had purchased a 2 percent stake in China International Fund Management, increasing its stake from 49 percent to 51 percent. In April, JPMorgan had announced that it plans to increase its stake in its Chinese mutual fund joint venture to 100 percent pending approval.
The bank's chief executive officer, Jamie Dimon, had stated earlier in the year that China continued to be a critical market for the company. Apart from taking full control of its Chinese joint venture, the bank is planning to significantly increase its investments in the region as part of its plan to expand its Asian business.
On Saturday, Chinese regulators also granted a network clearing license to American Express. This made American Express the first foreign credit card services provider to launch its onshore operations in China.
