Merrill eyes mainland securities
Merrill Lynch has held talks with Anhui-based Hua'an Securities about a tie-up to tap mainland securities market opportunities, according to sources.
The biggest US securities firm is said to be interested in owning 33 per cent of a joint-venture securities company and has had preliminary discussions with the China Securities Regulatory Commission (CSRC) about the proposal.
'[It was] just to gauge their response to the joint venture terms,' a source said. 'There has been no official submission yet.'
Another source close to Hua'an said the discussions with Merrill Lynch were not exclusive.
The securities brokerage industry in China, which has an underdeveloped stock market of 1,377 companies listed on its two domestic bourses with a combined market capitalisation of 3.9 trillion yuan, is heavily protected.
In line with agreements to join the World Trade Organisation, the CSRC issued rules in 2002 permitting foreign companies to own a maximum 33 per cent of investment banking joint ventures with domestic partners.
The joint ventures can underwrite domestic stocks and bonds but are barred from brokering yuan-denominated A shares.
BNP Paribas Peregrine, CLSA, and Goldman Sachs have mainland securities joint ventures approved under regulations issued after China's WTO entry.
