By The Associated Press and Bloomberg Staff writerSINGAPORE (AP) China is ramping up a $15 billion bid to buy shares of a new foreign exchange market and its top bank is stepping up lobbying against foreign investors.
The Financial Services Commission on Wednesday issued a notice that it wants to buy a total of 1.25 billion shares of the Shanghai-based CME Group Inc. in what is the latest in a series of moves to shore up the foreign exchange markets as China seeks to expand its economic clout.CME Group has been the biggest beneficiary of China’s new rules requiring that foreign exchanges offer more transparency in their business practices.
That has helped to bolster China’s economy, which accounts for more than a third of global trade and is expected to be the world’s second-largest in 2030, after the United States.
China wants to control prices, so it will seek to block any foreign exchange transactions that don’t comply with the new rules.
The commission’s notice is the first official indication of how China will try to use its new control over foreign exchanges to push its domestic market and drive up the value of the yuan, a key currency.
The commission wants to purchase 1.5 billion shares, of which it will take a 35 percent stake.
It could buy up to 2.25 million more shares if it can get approval from the People’s Bank of China.
It can also sell to foreign buyers if it thinks it’s not in compliance with the rules.
In a letter sent to the bank, the commission said it wants a shareholding of CME and the Shanghai exchange market.
It also wants the Shanghai bank to provide a statement in the next 30 days on CME’s compliance with foreign exchange rules.
The bank has said it has no intention to comply with foreign exchanges’ new rules and said it’s already in compliance.CSE Group said in a statement that it believes the new regulations are “necessary and appropriate.”
Its shares rose 1.6 percent to 2,500 yuan ($28.25) in afternoon trading.CMCSA, the China central bank, said last week it was working to reduce the size of its holdings of foreign exchange shares and is also pushing to buy CME shares to boost its market power.
It has been trying to expand the market in recent months.