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31 December 2019

JPMorgan seeks full control of its Chinese futures JV

The New York-based firm earlier in 2019 became the first US bank to receive Chinese approval to take majority ownership of a securities joint venture.

Bloomberg/Daniel Tepper

JPMorgan Chase & Co. is seeking 100 per cent ownership of its futures joint venture in China, making it the first global bank to take advantage of the opening of the nation’s futures market, where transactions topped $30 trillion last year, reported Bloomberg.

The US bank plans to raise its current 49 per cent stake in JPMorgan Futures Company. According to a filing to the China Securities Regulatory Commission, the onshore venture has applied for a major shareholding change involving more than a five per cent stake.

Starting with its futures and insurance markets, China will enact the most sweeping changes in decades from early next year to allow the likes of JPMorgan, Goldman Sachs Group and BlackRock to expand their footprint in China and compete for a slice of its growing wealth.

Huang Qifan, the Vice President at China Centre for International Economic Exchanges, said that global firms may invest CYN 7 trillion ($1 trillion) to CNY 8 trillion of assets onshore in the next few years.

Overseas companies currently have a tiny presence in China’s futures market which is dominated by nearly 150 local players. JPMorgan set up its joint venture in 2007 while UBS Group controls a futures subsidiary through its onshore securities outfit.

Foreign interest has so far been limited by restrictions in China on making unhedged bets against the market and quotas imposed on index and commodity futures. That could change quickly should authorities push forward with a broad swath of changes in the derivatives space.

Jamie Dimon, JPMorgan Chief Executive Officer, said that his firm is committed to bringing its full force to China.


RELATED STORIES: China Securities Regulatory Commission UBS Group JPMorgan Chase & Co.





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