The People's Bank of China has given approval to nine QFII (qualified foreign institutional investors) custodian banks, including six from home and three overseas ones, it announced in a press release yesterday.

HSBC, Standard Chartered and the US-based Citibank, became the first from overseas to get the go-ahead from the central bank to provide custodian services to qualified foreign institutional investors to trade on the US$500 billion A-share market.

At present, only their Shanghai branches can provide such a service.

The six domestic banks include the state-owned Industrial and Commercial Bank of China, Bank of China, China Construction Bank and the Agricultural Bank of China, as well as the shareholding Bank of Communications and China Merchants Bank.

The actual issuing of the QFII custodian licenses has to await the final nod from the State Administration of Foreign Exchange and the China Securities Regulatory Commission (CSRC). But a CSRC spokeswoman said that is mostly procedural work and the formalities should be over very soon.

Citibank said it will send a delegation to Beijing this week to meet with the securities and forex authorities to discuss the matter.

This is the first time the Chinese government has issued QFII related licenses. The move comes after it introduced the transitional scheme to open up China's securities market when the Chinese yuan is not fully convertible.

(China Daily January 15, 2003)