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US bank and Chinese broker set up fund JV

BANK of New York Mellon Corp will form a fund management venture with Western Securities in Shanghai this year to gain access to the country's securities market.

The Xi'an-based brokerage will hold 51 percent of the new venture, BNY Mellon Western Fund Management Co, and BNY, the world's largest asset custodian, will hold the balance.

The joint venture is expected to manage Chinese stocks under several retail fund products initially and will develop more products over time as it taps the expertise of the American bank.

The bank oversees about US$1 trillion in assets and has set up branches on the Chinese mainland since 1994. It has more than 100 business partners on the mainland so far.

In December 2007, China made it easier for foreign participation in domestic securities companies by allowing more overseas institutions to form joint ventures with domestic counterparts.

So far, nearly a dozen overseas companies including Goldman Sachs, Morgan Stanley and UBS AG have set up securities joint ventures on the Chinese mainland. In the past three months, Credit Suisse won a permit from China's stock market regulator for its mainland joint venture with Founder Securities, and Deutsche Bank got approval to set up a joint venture with Shanxi Securities Co.

The Shanghai Composite Index, which fell nearly 70 percent last year, has recovered 35 percent since November.


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