Morgan Stanley given green light to set up futures firm in China, accelerating financial opening-up
Published: May 26, 2023 05:45 PM
The office building of Morgan Stanley in Beijing Photo: VCG

The office building of Morgan Stanley in Beijing Photo: VCG

The China Securities Regulatory Commission (CSRC) has given approval for US-based Morgan Stanley to set up a futures unit in China, the watchdog announced on Friday, amid the country's accelerated opening-up of its financial sector.

The company became the second foreign institution to have a majority-owned futures unit, according to financial news portal

In 2020, JPMorgan became the first foreign institution to wholly own a subsidiary in the futures business in the Chinese mainland.

On Thursday, Fang Xinghai, deputy head of the CSRC, said during the 20th Shanghai Derivatives Market Forum that China will continue to expand the "width and depth" of the Chinese futures market's opening-up, according to a report from Shanghai-based news portal

The green light given to Morgan Stanley just one day after Fang's statement is proof of China's determination to open up its economy, Chinese experts said.

The event demonstrated China's welcoming attitude toward foreign institutions in its efforts to build a high-quality capital market, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Friday. 

The addition of different market entities from different countries and regions to the Chinese market will bring new ways of thinking and expertise, and further inject vitality into the Chinese financial market, increasing its competitiveness, Dong said.

CSRC said on Friday that in the next step, it will continue to deepen the opening-up of the futures market, and support qualified overseas institutions to invest in domestic futures companies to better serve the real economy.

Experts noted that the fact that foreign financial institutions are willing to expand their business here demonstrated the attractiveness of the market and its constantly improving business environment.

The opening-up of China's financial sector has accelerated in recent years, with the scrapping of ownership caps for foreign institutions for securities, futures and funds in 2020.

Net profits of the country's 150 futures companies amounted to 10.99 billion yuan ($1.63 billion), data from China Futures Association showed in February.

Experts said the high-level opening-up of the futures market will help Chinese market institutions gain deeper participation in the pricing mechanism of global bulk commodity markets, safeguarding supplies and stabilizing prices of China's strategic resources, such as carbon and lithium.

The further development of China's futures market also helps stabilize the turbulent global financial market as a result of crises in the US, they said.

Wang Peng, a research fellow at the Beijing Academy of Social Sciences, told the Global Times on Friday that the approval showed that China's determination to continue its opening-up to the world, especially in some key areas such as finance, is a way of making up for not being opened up enough. 

It also showed that China still wants to expand its pace of globalization by launching wide cooperation and making good use of the world's resources to boost economic growth, the expert said, in contrast with some countries such as the US, which is deliberately going the other way by decoupling.

The move will also help align China's futures industry with international standards, Wang said.