June 26 China Merchants Securities,
one of China's top five investment banks, has been approved by
UK regulators to broker listed derivatives as it aims to build
up a commodities business in the planned offshore yuan-clearing
hub, the bank said.
China Merchants Securities (UK) Limited plans to initially
offer commodities risk management services to meet demand within
China to hedge global natural resources price risks, while
aiding the internationalisation of the yuan, its Chinese parent
said in a statement on its website dated June 23.
"It would then gradually extend to become a comprehensive
investment bank", focusing on offshore yuan and cross-border
initiatives between China and the Europe, Middle East and Africa
(EMEA), the bank said.
The bank plans to hedge via the London Metal Exchange (LME)
Intercontinental Exchange Europe (ICE), London Bullion Market
Association (LBMA), and the London Platinum and Palladium Market
China's Premier Li Keqiang, on his first official trip to
Britain since taking office, said last week that Chinese banks
will further expand their businesses in Britain, naming China
Construction Bank as the first yuan clearing bank in
Britain and China signed deals worth more than 14 billion
pounds ($23.5 billion) during the visit with energy and finance
dominating the trade agenda.
China has relaxed controls over the last five years to
establish the yuan as an international currency of trade and
reduce its reliance on other currencies, but London is competing
with other financial capitals such as Singapore to secure a
slice of the fast-growing offshore yuan business.
The yuan is expected to become a leading so-called reserve
currency, meaning it will be stockpiled by central banks, and
could become fully convertible into other currencies as soon as
China Merchants Securities has over 100 branches in more
than 60 cities in China with over 8,000 staff, serving more than
4 million clients, according to the bank. It is 45.8 pct owned
by China Merchants Group.
(Reporting by Melanie Burton in SYDNEY; Editing by Muralikumar