JPMorgan Seeks Full Control of Its China Futures Joint Venture

(Bloomberg) -- JPMorgan Chase & Co. is seeking 100% ownership of its futures joint venture in China, according to a person with knowledge of the matter, making it the first global bank to take advantage of the opening of the nation’s futures market, where transactions topped $30 trillion last year.

The U.S. bank plans to raise its current 49% stake in J.P.Morgan Futures Co., said the person, asking not to be identified because the matter is private. The onshore venture has applied for a major shareholding change involving more than a 5% stake, according to a Dec. 25 filing to the China Securities Regulatory Commission, which didn’t give additional details.

JPMorgan declined to comment on the shareholding change plan.

Starting with its futures and insurance markets, China will enact the most sweeping changes in decades from early next year to allow the likes of JPMorgan, Goldman Sachs Group Inc. and BlackRock Inc. to expand their footprint in China and compete for a slice of its growing wealth. Global firms may plow 7 trillion yuan ($1 trillion) to 8 trillion yuan of assets onshore in the next few years, Huang Qifan, vice president at China Center for International Economic Exchanges, said this month.

Overseas companies currently have a tiny presence in China’s futures market which is dominated by nearly 150 local players. JPMorgan set up its joint venture in 2007 while UBS Group AG controls a futures subsidiary through its onshore securities outfit.

Foreign interest has so far been limited by restrictions in China on making unhedged bets against the market and quotas imposed on index and commodity futures. That could change quickly should authorities push forward with a broad swath of changes in the derivatives space.

JPMorgan Chief Executive Officer Jamie Dimon has said that his firm is committed to bringing its “full force” to China. The New York-based firm earlier this year became the first U.S. bank to receive Chinese approval to take majority ownership of a securities joint venture.

©2020 Bloomberg L.P.

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