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Money brokers set to cash in soon

By Jiang Yan (China Daily)
Updated: 2005-08-12 06:10

For example, ICAP, the world's largest money broker, is reportedly negotiating with the China Foreign Exchange Trade System Co, a central bank subsidiary and China's only organization with a foreign exchange trade licence.

Also, Tullett Liberty is reportedly in talks with Shanghai International Group.

The establishment of money brokers in China is expected to improve the liquidity and transparency of the money, capital and forex market, said the CBRC.

"It will also help realize a more efficient way of using capital resources," the watchdog said in a statement on its website.

The new regulation is aimed at answering market demand.

With the freeing up of China's money market and the establishment of a market-oriented interest rate system, the country's financial and other companies are facing increasing risks with frequent fluctuations of interest and currency rates.

Money brokers are necessary to help Chinese companies hedge risks, according to the CBRC statement.

There has also been growing inter-bank trading in China in recent years.

The number of participants in China's inter-bank market has grown from about 650 in 2001 to more than 2,000, which includes non-banking financial institutions active in the inter-bank bond market.

With the diversification of players and their investment requirements, China desperately needs professional brokers to facilitate deals.

During the trial period, there will be many restrictions on money brokers in China in order to reduce potential risks, according to the CBRC statement.

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