China to Bar Foreigners From Owning Brokerages

Western banks will have to settle for 20%
By Jason Farago,  Newser Staff
Posted Oct 3, 2007 10:59 AM CDT
A customer walks past an electronic board displaying the latest shares index at a stock market exchange in Beijing, China, Wednesday, Aug. 1, 2007. China's shares fell Wednesday, retreating from record-high...   (Associated Press)
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(Newser) – China's stock markets are booming, with 47 million new trading accounts opening this year, but foreign banks eager to cash in on the expansion will be frustrated: Beijing is about to introduce new rules prohibiting foreign investors from acquiring more than 20% of any Chinese brokerage, Bloomberg writes.

Goldman Sachs and UBS are the only Western banks that currently control Chinese investment units; rival banks will be unable to follow suit. Last May Chinese Vice Premier Wu Yi pledged to Treasury Secretary Hank Paulson, a former Goldman CEO, that she would open the Chinese securities industry to foreign firms. But now Beijing seems to be backpedaling, insisting that local firms need more time to prepare for competition.