A milestone for Haitong in global thrust
Securities group becomes first Chinese-funded market maker on Nasdaq bourse in US expansion
Haitong International Securities Group — a global financial services institution with an established presence in Hong Kong — has hit a milestone in its international business push, becoming the first Chinesefunded market maker on the US Nasdaq Stock Market.
The development signals that players in the Chinese securities industry have been fast extending their footprints in the global financial arena.
Haitong International Securities (USA) Inc — the US unit of Haitong International — launched its market-making business on the Nasdaq market on Oct 8, filling the void created by the long absence of a Chinese market maker.
“Market makers are a critical component of the financial ecosystem in the US. The company will first focus on China concept stocks as its major market-making target and adjust its coverage gradually based on the market, as well as the needs of clients in an effort to better serve global investors by linking up the Chinese and overseas markets,” said Haitong International Deputy Chairman and Chief Executive Officer Lin Yong.
Nasdaq expects Haitong International’s market-maker status to elicit a growing number of investors in the AsiaPacific region to trade on the US bourse.
In contrast with the designated market maker of the New York Stock Exchange, Nasdaq adopts a multiple marketmaker framework. Today, it has become the world’s second-largest exchange after the NYSE, with nearly 5,400 companies listed with a total market value of $10 trillion, and trading exceeding $1.2 trillion on average monthly. More than 500 of the listed companies are Chinese enterprises.
Since early this year, Haitong International has been extending its operations in the US, having acquired Qualified Intermediary status with the US Internal Revenue Service and becoming a member of Nasdaq.
It completed the first initial public offering of a Chinese company on the NYSE and the first convertible bond issuance in the US by a Chinese company listed on the Nasdaq in June this year.
Haitong International aims to establish a global platform for investment banking, trading and execution and investment services centering on New York, London, Hong Kong and Singapore to serve its 200,000 clients, and continue to foster its business expansion worldwide in electronic trading, market making, institutional client services and investment banking services.
In the first half of this year, Haitong International recorded revenues of HK$3.56 billion — up nearly 21 percent from a year ago. However, its net profit fell 17 percent to HK$859 million in the same period. Haitong International was established in 1996 and was listed in Hong Kong in 2012.
Haitong International’s parent company — Haitong Securities Co — was founded in 1988 and is a major securities firm in China, providing services in stocks and futures brokerage, as well as investment banking, corporate finance, mergers and acquisitions, asset management, mutual fund, and private equity.
The parent company was listed on the Shanghai Stock Exchange in 2007 and currently holds a 62.43-percent stake in Haitong International.
As China further opens up its financial market, the nation’s securities firms have been venturing abroad to expand their operations. They include China International Capital Corp and CICC Securities, which had set foot in the US market earlier, focusing primarily on sell-side businesses, such as providing underwriting services and advising clients on mergers and acquisitions.
CICC US Securities — CICC’s US branch — opened an office in New York in 2009, and CICC became the first Chinese broker-dealer to provide services for securities listed on US exchanges in 2010.
China’s securities industry watchdog — the China Securities Regulatory Commission — last month revised relevant regulations regarding securities firms and fund-management companies embarking on overseas business expansion.
It stipulated that Chinese securities companies’ net asset size must be not less than 6 billion yuan if they want to expand their businesses overseas. For fund managers, the net asset threshold is set at not less than 600 million yuan. Both must continue operating their businesses for at least two years.