Spain’s Renta4 has appointed Citi to provide it with execution to custody services for transactions in China A-Shares through the Shanghai-Hong Kong Stock Connect (Stock Connect).
Renta4, a publicly listed Spanish bank, specialises in wealth management, brokerage services and corporate advisory services. This move makes it the first Spanish financial institution to directly access the China A-Share market. Citi will provide an integrated pre- and post-trade solution including execution, settlement and custody services.
Said Luis López, Renta4 CEO: “The opening of the Chinese capital markets offers a wealth of investment opportunities to our clients and tapping this significant market was a logical step in our growth strategy. Stock Connect revolutionises access to the market by proposing a much simpler option than previous access routes, however the scheme still presents some challenges, which Citi has seamlessly helped us navigate.”
Citi adds that it leverages the strength of its brokerage platform and the capabilities of its on-the-ground custody network in more than 60 countries to deliver an integrated solution that provides Renta4 with a true delivery versus payment (DVP) settlement, thereby minimising counterparty risk and avoiding the need for pre-delivery of shares.
Said Benoit Dethier, European head of Asia flows for securities services, Citi: “Renta4have positioned themselves as a pioneer in the Spanish market and we look forward to contributing to their global growth strategy while further strengthening our long-term execution to custody relationship with them.”
Launched in November 2014, Stock Connect has improved access for international investors into the world’s second-largest economy in terms of GDP (gross domestic produce) by allowing international investors with Hong Kong brokerage accounts to transact in A-shares in China.
Cindy Chen, Hong Kong head of securities services, Citi added: “In just one year, the average daily trading volume of Stock Connect’s Northbound Trading Link has reached US$1 billion, accounting for approximately 10 percent of Hong Kong’s daily market turnover. Over time, we expect Stock Connect to become the primary channel for global investors to access mainland China securities as more institutions, like Renta4, start leveraging this new channel.”