In addition, new regulations allowing foreign brokers to run local Chinese brokers from October 2007, will create the need to install trading and business processes and systems to support straight-through processing (STP).
With a view to capitalising on these developments, London and New York-based Coexis Limited recently announced a strategic partnership with Chinese IT services provider Serisys Solutions Limited to sell and support Coexis’ ‘Syn~’ branded capital markets applications to international investment banks and Chinese brokers.
Tim Marsh, chairman of Hong Kong headquartered Serisys said there were 108 local brokers in China, only 18 of which have been nominated as well run. Serisys plans to market Coexis’ transaction processing software to around 50 of these brokers, with smaller such players being offered the functionality (on-line trading, order management, settlement and accounting) in an application service provider (ASP) solution.
He said Syn~ will be targeted eventually at fund managers in China, adding that the system was able to support structured products and complex derivatives once these were permitted by the securities regulator.
UBS and Goldman Sachs are currently the only global investment banks with minority stakes in joint ventures with Chinese brokerage firms, through which they enjoy management control. UBS has a 20 per cent holding in a recently-formed joint venture operation with Beijing Securities called UBS Securities, while Goldman Sachs owns 33 per cent of the joint venture Goldman Sachs Gaohua Securities which was established in 2004 in Beijing.
Although Morgan Stanley was the first international investment bank to buy a stake in a Chinese securities firm – it owns a 34.3 per cent stake in China International Capital – it no longer exercises any management control.
Citigroup, Credit Suisse, Merrill Lynch and JPMorgan have been forced to put their plans for expansion in China on hold until the government lifts a freeze on approving new brokerage joint ventures which was imposed last September.
HS
