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The China’s forex controller for the first time in more than four years permissible three additional brokerages to trade onto the domestic interbank foreign exchange market. The Move is an additional step in China’s revamp of the forex market to increase the diversity of market players and improve the market’s volatility. The Pilot qualifications of Citic securities co, Huatai securities co and China Merchants securities Co were approved by the state administration of foreign exchange on Thursday . The Priorly, Guotai Junan Securities Co and harvest fund administration were the only two non bank participants. They were contracted forex trading licenses in late 2014 and early 2015.
Some Brokerage companies have conventional forex teams but couldn’t obtain the Licenses, a individual at a brokerage told Caixin. Some Brokerage Companies have Predictable forex teams but couldn’t acquire the licenses, an individual at a brokerage told Caixin. Currently in the interbank forex market, the Brokerages mainly conduct proprietary trading, in which the companies trade Forex with their own money instead of client’s funds. Their trading is mostly netting transactions, the trader states the value of multiple positions. The Main players in China’s interbank forex market are the Commercial banks and companies that have foreign currency needs for imports and exports.
The China maintains tight control on the Interbank forex market when companies necessitate to substitute reminbi into foreign currency to pay vendors, they have to go all the way through banks and demonstrate the transaction for actual business. Only banks were permitted to conduct forex trading. A former Chinese Central bank representative recommended that allowing more non bank players, fund managers, involving brokerages, option traders, to demeanor exploratory trades in the Interbank forex market could enhance the liquidity of the market. The forex needs cross border securities investments are imposed by Nonbank financial institutions and such transactions are frequently in small amounts at high frequencies, which could increase the liquidity of the market, stated Guan Tao Former director of foreign exchange regulator’s balance of payments Department.