Top Biz News

Huatai buys 49% of Great Wall Futures

By Jin Rong (China Daily)
Updated: 2006-08-01 10:12

Only securities firms classified by regulators as "innovative securities brokerages" will be able to obtain the IB licence, a move that is designed to minimize the risks involved in financial futures trading.

Currently, only 17 securities brokerages fall into that category, of which seven firms already have stakes in futures companies.

Furthermore no new futures company licences will be issued in the future, according to an internal meeting held by the China Securities Regulatory Commission (CSRC) last Friday, an arrangement that experts and industry players say will make futures brokerage firms much more alluring to securities houses.

"Under such circumstances, it is not surprising that securities firms' interest in buying into futures companies has grown dynamically recently," said Chen Shuyun, assistant manager at Huachuang Securities.

Securities firms "are encouraged to buy or take over futures companies in order to be involved in the brokerage business of financial futures trading," according to the CSRC, the country's top securities and futures regulator.

The current 50 per cent stake buyout ceiling will be relaxed in order to encourage securities firms to buy futures companies, according to the regulator.

Some financially powerful securities brokerages with sound risk-control management mechanisms will even be allowed to take full control of futures companies.

Currently, about 30 securities firms have taken stakes in 46 futures companies, according to industry players.