Home / First broker enters China’s custody business

First broker enters China’s custody business

As some Chinese banks are looking to expand into regional and then global custodian services – notably Bank of China and ICBC – they now face competition at home from their domestic brokerage firms.

The China funds management research house Z-Ben Advisors reports in its client newsletter that China Merchants Securities (CMS) has become the first brokerage firm to qualify to become a custodian.

“This opens up new opportunities for brokerages to work with private funds and ends banks’ exclusive control over the custodian business,” Z-Ben says.

  • According to Qin Xiang, deputy general manager of the Clearing Centre in CMS, CMS will provide comprehensive custodian services to private funds. In addition to providing clients traditional bank services – asset custody, NAV calculation an investment clearing – CMS will include investment monitoring, information servicing and risk assessment and management.

    Interestingly, Z-Ben Advisors comments that it expects many brokerages to establish their own custodian arms in China because “the segment has low operating costs and provides a steady flow of income”. We’re not sure the major custodians would agree with this observation on their businesses.

    Investor Strategy News


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