Make way! China considers up to $50,000 per person in overseas investment

Rick Steves

New volumes coming into the FX market from China could also make up for the loss in average trading volumes as a result of restrictions in leveraged trading imposed by some of the leading regulators in the world.

china

China is considering allowing investment in overseas securities and insurance up to US$50,000 per citizen, according to China Forex magazine. The easing of the country’s strict capital controls could signal a new wave of money into trading instruments from the most populated country on earth.

“We will study the impact on China’s balance of payments, yuan exchange rates, and financial markets from overseas unconventional stimulus policies”, said Ye Haisheng, head of the capital account management department at the State Administration of Foreign Exchange (SAFE).

If China does go forward with the opening up of its financial derivatives market, the foreign exchange industry has much to gain as it is designed to accommodate international demand with many different traditions, languages, strategies, interests, and knowledge.

New volumes coming into the FX market from China could also make up for the loss in average trading volumes as a result of restrictions in leveraged trading imposed by some of the leading regulators in the world. Australia’s ASIC has decided to follow European Union’s ESMA lead in 2018 and has issued the new rules to come into effect in March 2021.

In 2017, the foreign exchange industry enjoyed new opportunities for multi-asset brokers in China after a complete role-reversal in regulation. The new law against regional exchanges opened the door to retail FX as companies look toward OTC electronic trading via international liquidity providers in order to retain their existing audience and branch out, whilst protecting themselves against closure.

This would mean the opening of prime brokerage accounts with global providers and using platforms hosted in mainland China, but developed and owned by global companies, in order to connect an existing Chinese client base to Chinese and international asset classes.

Saxo Bank is an example of a European trading company adapting to the new rules. The firm was acquired by Chinese automaker group Geely and took a prominent position to provide the needed liquidity to the Chinese OTC market.

The take over significantly boosted Saxo’s business opportunities in China and elsewhere as it gained access to a much wider market to whom provide its financial and regulatory technology such as cloud-based services, big data, and artificial intelligence in areas of trading and investment,robo-advisory, asset management, risk solutions, and Regtech. The firm has recently reported 400% growth in revenue since the takeover.

 

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