Bank of China (BoC) [3988:HK] announced that it has obtained approvals from CBIRC and CSRC to conduct Chinese Depositary Receipts (CDRs) related business, according to BoC’s announcement on Hong Kong Exchanges and Clearing (HKEx) on November 6. BoC is China’s first commercial bank to gain such a license. Under the authorization, BoC will be able to deposit and manage RMB-dominated CDRs for foreign-listed companies and help them access the domestic capital market. The qualification will benefit BoC in terms of earning commissions and strengthening relationships with overseas businesses.
CDRs make it possible for domestic investors to buy securities from companies listed on Hong Kong and foreign stock exchanges, especially from large Chinese tech companies such as Tencent [0700:HK], Baidu [BIDU:US], JD.com [JD:US] and Alibaba [BABA:US]. However, amid slowing Chinese stock markets, companies such as Xiaomi [1810:HK], Alibaba and JD.com have shelved their CDR issuances earlier this year. CSRC and CBIRC are currently seeking ways to help innovative companies list on the mainland stock exchange. This June, they issued guidance for commercial banks to apply depository qualifications. According to Sina Finance, China Merchants Banks (CMB) [3968:HK] and Agricultural Bank of China (ABC) [1288:HK] have also submitted applications for such a license.