However, the rules maintained that foreigners may own only up to one-third of such companies, dashing the hopes of many investors who had wanted to see that cap raised.
BEIJING (Reuters) - China on Friday eased the rules governing foreign brokerage firms' joint ventures, modestly expanding their business scope and lowering the requirements for foreign firms entering the sector.
However, the rules maintained that foreigners may own only up to one-third of such companies, dashing the hopes of many investors who had wanted to see that cap raised.
They also did not open up broking of domestic currency A-shares to such JVs, another long hoped-for change.
The new rules, which were approved by the China Securities Regulatory Commission (CSRC) on November 29 but were only published on Friday, will take effect from January 1, 2008.
!ADVERTISEMENT!They will for the first time allow foreign-invested brokerage JVs to sponsor offerings of bonds and shares, including A-shares, in addition to underwriting such issues.
The rules also make clear that foreigners may take stakes, including strategic stakes, in listed Chinese brokerages, which unlike JVs are able to conduct a full range of broking activities.
Stakes in listed brokerages are capped at 20 percent for a single foreign investor and 25 percent for all foreign investment combined -- identical to those in place for the country's commercial banks.
The rules also stipulate that unlike for foreign JVs, listed brokerages that have foreign investment do not need to have a single Chinese investor who owns at least a one-third stake.
Firms forming JVs will also face less stringent requirements on the minimum number of employees and the number of years they have been in operation.
U.S. and European financial firms have been pressing Beijing to open its brokerage and other financial industries to wider foreign investment, including by raising ownership caps.
The rules come after a two-year overhaul of the country's once-troubled brokerage sector that has involved a moratorium on issuing new licenses for foreign securities JVs.
Beijing agreed at economic talks with the United States earlier this month -- after the approval of the new rules -- to resume licensing such ventures, without giving a timetable.
Goldman Sachs, Morgan Stanley and UBS currently operate brokerage ventures in China, while several other foreign firms, including Credit Suisse, HSBC and Citigroup, are in talks with potential Chinese partners, industry sources have said.
(Reporting by Zhou Xin, Eadie Chen and Jason Subler; Editing by David Cowell)
