JPMorgan Bids to Fully Control its Futures Business in China

JPMorgan Chase is moving to control 100 percent of its futures joint venture in China, a few weeks after the US bank secured the go-ahead to start operating its majority-owned securities business in the mainland.

JPMorgan has applied to win an auction to purchase the shares needed for a majority equity stake in its Chinese futures joint venture, pending regulatory approval. The lender is bidding for 5 percent of J.P.Morgan Futures Co., a joint venture between the bank and its local partner. JPMorgan currently owns 49 percent.

The move comes as new Chinese regulations that lift investment caps and allow foreign banks’ majority control of their mainland business are set to take effect on January 1, 2020.

Separately, JPMorgan in August bought a majority stake in its Chinese mutual fund business. The deal, which is also pending regulatory approval, values the entire asset manager at $1.7 billion. At the time, it said the ultimate goal was to develop its mainland business into a full-fledged offering that will form a core part of its strategy in Asia.

China moves to open up the financial sector

Chinese regulators said they would continue to approve foreign firms’ control of their joint ventures as these licenses are a key part of China’s pledge to open its $40 trillion financial markets. The policy relaxation allows foreign investors to own as much as 51 percent of their securities ventures, up from the current 49 percent ceiling.

In 2018, Beijing gave UBS approval to hold a majority stake in its securities joint brokerage, becoming 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.

Japanese brokerage Nomura Holdings also 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.