Shenzhen Qianhai Financial Holdings Co., a subsidiary of the Qianhai special zone administration, has reached separate agreements with HSBC and Bank of East Asia (BEA) to establish a full-service securities brokerage in Qianhai.
Such joint ventures are allowed under the Closer Economic Partnership Arrangement for qualified Hong Kong financial companies that have partners in Guangdong province or Shenzhen.
The Hong Kong partner can hold as much as 51 percent of the joint venture.
HSBC has such a stake in the joint-venture brokerage but Qianhai Financial will control the venture with BEA.
The securities firms will separately have a license for brokerage and investment banking services.
Presently, most foreign-mainland securities joint ventures are limited to investment banking.
Qianhai Financial is hoping to leverage the Hong Kong banks’ healthy corporate governance systems, diversified client base, risk management expertise and international experience.
That’s not to mention Hong Kong being an international financial hub.
In addition, the China Securities Regulatory Commission is planning measures to support the development of Qianhai’s capital market.
Also, Qianhai is likely to benefit from friendly policies already enjoyed by the Shanghai free trade zone.
These are important steps toward an open and internationalized capital market.
In the future, Qianhai is expected to see increased cross-border financial activity and deeper cooperation with overseas exchanges.
By then, Qianhai will play a crucial role in linking the capital markets of Shenzhen and Hong Kong, supporting the sustainable development of both sides.
This article appeared in the Hong Kong Economic Journal on Jan. 11.
Translation by Myssie You
[Chinese version 中文版]
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