Citadel Securities hires former BlackRock China head, ex-CSRC regulator to lead expansion in US$10 trillion market

The US market maker hires Tang Xiaodong to lead its China expansion as Beijing turns to market-friendly measures
Tang resigned from BlackRock in June and will join Citadel Securities, whose business in China was once chastised by authorities during the 2015 market crash

China stock market

Jiaxing Li

Published: 2:16pm, 31 Jul 2023

Why you can trust SCMP

Citadel Securities, Ken Griffin’s market-making business, hired BlackRock Inc’s former China head to spearhead its business just as the US$10.3 trillion Chinese stock market is regaining its composure and favour among foreign investors after years of market crackdown.

Tang Xiaodong will join the company in September, and lead its China team to work closely with local clients, business partners and regulators, the company said. He quit BlackRock, the world’s biggest money manager, in early June, accrding to local media reports citing personal reasons.

Before joining the world’s biggest money manager in Hong Kong in July 2019, Tang headed the international business of GF Securities and was CEO of China Asset Management Co, where he built partnerships with global counterparts to localise their China strategies.

He also held senior roles at the China Securities Regulatory Commission, taking part in several initiatives to increase overseas investment in China, the statement added. Tang was deputy director of the fund department at CSRC, according to one regulatory citation.

01:49

Premier Li Qiang plays up China’s economic prospects at World Economic Forum’s ‘Summer Davos’

“China has always been of great interest to international investors,” Peng Zhao, CEO of Citadel Securities based in Miami, said in a statement on Monday. “Tang’s successful experience in China and his in-depth understanding of the industry will help drive our business development in China and the next phase of global growth.”

Peng Zhao, CEO of Citadel Securities LLC. Photo: Handout

Some US hedge funds have also been building stronger teams with inside knowledge of the China economy and political workings. In recent times, the world’s biggest hedge fund Bridgewater Associates and peer Point72 Asset Management have looked to hire China specialists to help improve returns.

China said in February that a registration-based initial public offering (IPO) system would be implemented at all the stock exchanges in Shanghai, Beijing and Shenzhen to modernise practices to match global standards. A year ago, the Shanghai bourse picked 10 market makers to help spice up trading.

Bridgewater, Point72 seek China specialists as policy shocks crimp returns

Tang’s appointment comes at a time when the US market maker is strengthening its local presence even as US-China relations are frayed by geopolitical tensions and technology rivalry. The company in February attained the “qualified foreign institutional investor” or QFII licence, giving it wider access to the onshore stock and bond markets.

The CSI 300 Index, which tracks the largest onshore companies listed in Shanghai and Shenzhen, jumped 4.4 per cent in July, the biggest monthly gain since January. Still, hedge fund exposures in Chinese equities are currently around the lowest levels since November 2022, and well below five-year averages, according to data from Goldman Sachs.

Hedge funds claw back almost half of China onshore stock bets: Goldman

Griffin founded his hedge fund Citadel in 1990, which now manages about US$62.3 billion of assets globally.

Griffin has been involved in the China’s capital market for about 14 years. During the depth of China’s stock market crash in 2015, his venture with Guosen Securities in Shanghai was chastised by market authorities amid a crackdown on “malicious short-selling.”

Citadel Securities agreed to pay 670 million yuan (US$97 million) to settle a probe by regulators into alleged trading rules violations, Bloomberg reported in January 2020.

As China’s financial and securities industries continue to develop, Citadel Securities will remain focused on providing the market with more consistent and reliable liquidity, Citadel Securities said on Monday. China remains one of the main engines driving global economic growth and a key market for its international business development, it added.

Post