HONG KONG • Standard Chartered Bank (China) has become the first foreign bank to be granted a licence to provide custody services to domestic funds and asset managers in China, the bank said yesterday, as Beijing took another step towards opening its capital markets.

Since last year, a handful of foreign asset managers have been permitted to set up onshore operations and sell investment products in China. However, custody - holding clients' securities for safekeeping - has, until now, been restricted to locals. This new licence, granted by the China Securities Regulatory Commission, will allow StanChart to provide custody services to foreign asset managers operating in China, as well as domestic players.

"This is a big step forward in the further opening up of China's domestic financial markets," said Ms Jerry Zhang, chief executive and executive vice-chairman of Standard Chartered China, in a statement.

China's equity and bond markets, at nearly US$20 trillion (S$27.7 trillion), are the third largest in the world, according to the statement. The Chinese authorities are cautiously opening these markets to foreign asset managers. Last year, Fidelity became the first global asset manager allowed to launch investment products through a wholly owned local subsidiary, and others such as Man Group and Aberdeen Standard Investments have since followed suit.

Global asset managers are particularly keen to tap commercial pensions, as the Chinese authorities roll out proposed reforms and pilot programmes with the aim of building a commercial private pension market in China.

REUTERS