Japan to establish first foreign-owned broker approved for operations in China

September 4, 2020.

Tokyo-based Ueda Yagi Tanshi Co. will be the first wholly foreign-owned money broker to operate in mainland China, after receiving approval on Friday from the .

The action marks the latest development in the Chinese government's ongoing effort to open up the country's financial markets to the rest of the world.

The broker will need to review the qualifications of its shareholders, complete the preparations and establish its new location in Beijing within six months of the approval. Financial business activities are not permitted during the preparation period.

Under the name Ueda Yagi Currency Brokerage (China) Co., the broker will be supervised by the Beijing Banking and Insurance Regulatory Bureau. It will apply to the bureau to officially open after completing the preparation work.

Ueda Yagi will facilitate fundraising, bond trading and foreign exchange trading among financial institutions in China. 

China announced 11 measures in July 2019 that detailed how it would allow more foreign entities into the Chinese financial industry, "sooner rather than later."

This included efforts to "encourage overseas financial institutions to participate in the establishment and investment in the wealth management subsidiaries of commercial banks," as well as "allow overseas asset management institutions to establish joint ventures with subsidiaries of Chinese banks or insurance companies to establish wealth management companies controlled by foreign parties."

The Chinese government also said it would allow foreign entities to participate in pension fund management companies and currency brokerage companies, and relax the entry requirements for foreign insurance companies.

In June 2020, JPMorgan became the first foreign bank to own a futures company in China, after getting approval from the

JPMorgan plans for the securities and futures business to offer services in China that include securities brokerage, securities investment advisory and securities underwriting and sponsorship.

Also in June, AIA Group was approved to become the first foreign company to operate a wholly owned life insurance subsidiary in mainland China. The Hong Kong-based AIA already had operations in China, and is converting them into a wholly owned subsidiary. 

And earlier this week, the Japanese investment bank Group Inc. and the Singaporean Bank were both approved to set up majority-owned securities joint ventures in China.