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Screenshot of a breaking news alert e-mail from Q2 2017
A long-standing subject of both interest and frustration among board members of most Western FX companies has been the dichotomy presented by the extremely high potential revenue and the difficulty of accessibility relating to conducting business with Chinese customers.
Until now, all companies wishing to do so have been confronted with obstacles such as a very strict Chinese government which prevents the establishment of Western firms on its shores, extreme difficulty and expense in taking deposits from customers in mainland China, all of whom prefer overseas firms and have a great propensity toward FX trading, and the inability to break down barriers of communication via the internet.
Most FX firms have managed to utilize costly but effective measures of garnering a Chinese client base, with methods ranging from basing branch offices in neighboring regions of the Asia-Pacific such as Hong Kong and Singapore and making use of independent representatives in China, to innovative payment solutions companies such as SafeCharge, a firm which has risen to success in its own right, providing dedicated technological methods of conducting payment via the internet from client to company.
Today, a milestone has been reached as it has emerged that North American global brokerage firm BGC Partners (NASDAQ: BGCP) has received approval from China’s state-owned FX regulatory authority has granted the firm approval to broker FX options in mainland China.
The means by which BGC Parners has achieved this is via China Credit BGC Money Broking Company Limited (CCTBGC), the company’s joint venture with China Credit Trust Co. Ltd.
The license has been granted a license by the State Administration of Foreign Exchange (SAFE) to broker FX options to the interbank market in China.
FX in China is relatively undeveloped, and the market opportunities are vast, yet most companies are burdened with the expense and difficulties of paying representatives and several layers of introducing broker, plus high costs of handling client funds between China and the free world.
CCTBGC was established in 2009. The following year it became the first Sino-foreign joint venture inter-dealer broking company to be granted a business license by the China Banking Regulatory Commission to operate in Beijing and has since offered interest rate swaps, bonds, interbank cash deposit products and FX forwards to Chinese and foreign banks in China.
“I am delighted that BGC has received its license to broker FX options in China,” was the corporate view of Daniel M. LaVecchia, Executive Managing Director, North America and Global Head of FX Products. He continued: “Since commencing brokering of FX options at the end of March we have seen strong interest and demand from our valued clients. The addition of FX options to BGC’s suite of products means we are well placed to meet the needs of the marketplace in China through an extended and comprehensive array of FX products.”
“We are pleased the marketplace has responded swiftly and positively to our joint venture, largely due to the application of our world-class technology as well as our deep access to liquidity,” commented Shaun D. Lynn, President of BGC. “Our ability to now offer FX options in addition to other financial instruments is being welcomed by our clients, further strengthening our position in the market and underscoring BGC’s commitment to China and the Asia-Pacific region.”