Illustrating the importance of China for the financial services industry, Depository Trust & Clearing Corp., the New York-based trade clearing and settlement company, recently opened an office in Shanghai. The office won't be servicing Chinese companies, but rather companies throughout the rest of Asia.
Still, the long-term goal is clear.
"The laws of China are encouraging disclosure and timely reporting of corporate actions," said James Femia, DTCC managing director and head of the firm's global corporate action business in New York.
"Our office is an operations site as opposed to a sales office, but we are in the process now of establishing a representative office, which will allow us to conduct business in China," he said. "China has been expanding exponentially as a financial powerhouse and is today a force to be reckoned with."
The new DTCC office in Shanghai, which officially opened Oct. 11, was the final piece of a three-part strategy designed to provide round-the-clock coverage for the company's fast-growing global corporate actions business.
From Shanghai, "we're looking at covering basically all Asian corporate action announcements," Mr. Femia said. "New Zealand, Singapore, Taiwan, Japan, Hong Kong and Australia are the countries where more of these events are taking place."
Corporate actions include dividend announcements, stock split notices, tender offers and annual meeting announcements.
Overall, the Asia-Pacific region ranks third behind North America and Europe in number of corporate actions, but its numbers remain small. According to data from DTCC, for the 12 months ended March 31, just 62,000 corporate actions took place in Asia-Pacific, compared with 624,700 in North America and 203,000 in Europe.
Mr. Femia said Asian corporate actions are the most complicated because of different market standards and practices as well as language differences, all of which DTCC officials considered when deciding where to put its Asian operations center.
"We conducted an exhaustive search targeted around the Asian marketplace," he said. "We were targeting the availability of skilled and educated labor pools, we had certain language requirements, and we were looking for cost effectiveness and a good quality of life."
The Shanghai office is staffed by two expatriates and 10 local employees. Mr. Femia said the expatriates are there temporarily to get the office up and running, and that eventually 30 employees will be working out of the office.
"We found the labor pool has been of very, very high quality," he explained. "They're educated and eager and have caught on to this area of asset servicing that I wouldn't necessarily say is an area of specialty" for them. He added that Chinese government officials were accommodating.
"We know there is considerable interest in our services in Asian marketplaces," he added. "And as our business expands, I certainly would believe" more business would come from China.