Standard Chartered fortifies custody position in China
First foreign bank to implement domestic mutual fund custody, WFOE private fund custody
10 Jun 2021 | The Asset

Standard Chartered Bank (China) has successfully closed a mutual fund custody deal in June and a wholly foreign-owned enterprise (WFOE) private fund custody deal in January 2021, making it the first foreign bank to execute deals in these two focused segments.

China’s US$3 trillion mutual fund market has long been a key segment that is highly prioritised by the domestic custodial industry, subject to the most stringent local regulations and quality standards and dominated by the few local big banks. The opening up of the market to international custodians has since created more options for domestic mutual and private funds.

With their overseas roots, WFOE fund managers are often seen as another business focus for foreign banks that have received or are applying for a local fund custody licence, as these WFOE can tap on the extended operating model of the international custodian for ease of set up and navigation in China.

“With the increasing capital flow between China and other international markets, the successful execution of these deals further demonstrates the strength of our differentiated proposition – one that combines the bank’s global network with our longstanding local custody experience to support our clients as they expand their business proposition to China,” says Margaret Harwood-Jones, co-head of financing and securities services, Standard Chartered. “We look forward to deepening our role as a connector bank for global institutions looking to enter the Chinese market.”

Having established its custodial business in China in 1992, Standard Chartered has to date built a sizable presence in both the inbound (QFII/CIBM) and outbound (QDII) investment schemes, and has custodized products from around 25 local brokers and fund managers. In 2018, it became the first foreign bank in China to be granted the domestic fund custody licence.