The State Administration of Foreign Exchange approved pilot qualifications of Citic Securities Co., Huatai Securities Co. and China Merchants Securities Co. to conduct interbank forex business both in proprietary trading and on behalf of clients, adding additional brokerages to trade on the domestic interbank foreign-exchange market for the first time in more than four years, said Caixin.
Previously, Guotai Junan Securities Co. and Harvest Fund Management were the only two nonbank participants. They were granted forex trading licenses in late 2014 and early 2015. Since then, some brokerage companies have established forex teams but were unable obtain the licenses
The move is another step in China’s overhaul of the forex market to increase the diversity of market players and improve the market’s liquidity, reported Caixin.
Currently in the interbank forex market, brokerages mainly conduct proprietary trading, in which the companies trade forex with their own money instead of clients’ funds. Their trading is mostly RMB netting transactions, where the trader offsets the value of multiple positions.