China's Securities Houses, Banks Forge Closer TiesChina's leading bank, the Industrial and Commercial Bank of China (ICBC), has recently signed deals for cooperation with Haitong and Everbright Securities firms.The bank's Shanghai branch also entered into agreements with Nanfang, Huaxia, Guotai-Jun'an and four other securities houses for jointly opening a new service that allows bank customers to trade stocks on their current deposit accounts. The Shanghai branch of the Agricultural Bank of China and the Merchant Bank also signed pacts with securities brokers for the same service. The deals are part of a new wave that has swept China's banking and securities sectors since last year, which aims to expand the territory of both sectors without breaking the regulatory lines between them. The new service, known as Yinzhengtong (passage between banks and securities houses), requires the connection between a bank's computer network and a securities broker's trading system to enable investors to trade through the bank's telephone banking system and settle the deals on their current deposit accounts. Banks and brokers in Guangdong and Fujian provinces started such services last year. Yinzhengtong has been widely described as a win-win choice. Securities brokers are able to expand their customer base with banks' huge networks, while banks are able to increase business income with the new intermediate service. It also benefits investors because it allows them to deposit or withdraw money on holidays and after office hours. As the service requires no deposits at the brokers and keeps the investor's money under the custody of banks, it also avoids the risk of embezzlement of investors' funds by brokers -- a once- rampant reality in the securities sector. According to Ji Xiaohui, president of the ICBC Shanghai branch, securities-related services have opened a new source of profit for his bank. Over 60 percent of Shanghai's securities trading values are now settled through the ICBC, he said. Fu Xuedong, deputy president of the Guotai-Jun'an Securities Company, said cooperation between banks and securities houses will improve the competitiveness of both sectors. |
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