China PBOC to Draft Package for Financial Market Opening, Sources Say

• China PBOC to Draft Package for Financial Market Opening, Sources Say

China’s central bank is drafting a package of reforms which would give foreign investors greater access to the nation’s financial services industry, according to people familiar with the matter.

The People’s Bank of China will convene an internal meeting on Tuesday to discuss its proposals and get feedback from Chinese institutions, said the people, who asked not to be identified as the matter is private. The meeting will also discuss the timetable for opening up the financial sector and the lessons learned from previous cooperation with foreign firms, the people added.

While the details of the plan have yet to be finalized, it may include permission for foreign institutions to control their local finance-sector joint ventures, as well as raising the current 25 percent ceiling on foreign ownership in Chinese banks, the people said. It may also allow foreign firms to provide yuan-denominated bank card clearing services, one of the people said. The China Banking Regulatory Commission is also involved in the proposal, the person added

The PBOC couldn’t immediately comment on the matter. The CBRC didn’t immediately respond to a fax seeking comment.

China sent a signal it plans to press ahead with opening up the financial sector when central bank Governor Zhou Xiaochuan said in June that too much protection for domestic institutions weakens the industry and can lead to financial instability. Last month, China’s cabinet said the country will continue to open up various industries, including banking, securities, insurance as well as electric cars.

Currently, overseas investment banks can only hold minority stakes in their local securities joint ventures, and have been largely excluded from lucrative businesses such as secondary-market trading in Chinese debt and equities, as well as from managing money for wealthy clients.

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, who last year decided to exit a minority-owned Chinese investment-banking joint venture, said in June that the U.S. bank is patiently negotiating with Chinese regulators to find a new structure that would eventually allow full control.

Insurance Opening

China will open up its insurance market further, mainly by encouraging foreign insurers already operating locally to enter the health, pension and catastrophe insurance sectors, China Insurance Regulatory Commission Vice Chairman Chen Wenhui said earlier this month.

Chinese regulators last year decided to open up the nation’s fund market, allowing investment firms in China to be 100 percent owned by foreign managers. At least a dozen global money managers such as Man Group Plc, Bridgewater Associates and Fidelity International have announced plans since then to start private securities funds. Before the rule change, foreign firms were restricted from running such private funds in China but could take stakes in mutual fund companies and provide advice to onshore funds.