HSBC strikes deal with BlackRock for custody in China

HSBC will provide custody services for the first US-based RQFII for BlackRock.
By Paul Walsh
HSBC Bank (China) has been appointed the onshore custodian bank for BlackRock Fund Advisors (BlackRock).

The move follows BlackRock’s approval by Chinese regulators to use the Chinese currency, the Renminbi (RMB), to directly access China’s onshore securities market.

BlackRock is the first US-based institutional investor to obtain a Renminbi Qualified Foreign Institutional Investor (RQFII) license.

The announcement adds to a growing list of developments supporting US-China investment ties.

The RQFII program provides global investors with direct access to invest into China’s capital markets. In June 2016, China allocated to the United States a milestone RQFII quota of RMB 250 billion, the largest quota globally outside of Hong Kong.

“HSBC is delighted to be appointed the custodian bank in China for the first RQFII license in the US,” said Pat Burke, president and CEO for HSBC USA.

“This landmark deal reinforces the strategic importance of US-China commercial relationship as well as the significant strides made in opening China’s capital markets to American investors.”

As BlackRock’s custodian bank in China, HSBC facilitated its application for the first US RQFII license.

“The size of the RQFII quota granted to the United States in June is further evidence of China’s commitment to accelerating its financial reforms by giving investors greater access to its markets,” said Cian Burke, group general manager, global head of securities services for HSBC.

“This deal comes at a pivotal time for RMB internationalisation globally. The RMB was recently included into the IMF special drawing rights basket, elevating the currency onto the world stage and marking its entry as a global reserve currency.”