China is considering allowing U.S. financial firms like Citadel Securities and Jane Street to act as market makers in its booming exchange-traded fund (ETF) sector, according to a Reuters report that cited two sources familiar with the matter. While Chinese regulators have recently issued more licenses to local firms, officials see value in bringing in more experienced international players in order to improve ETF liquidity and reduce costs. However, the sources emphasized that no final decision has been made.
These discussions come as China faces 145% tariffs from the U.S., a situation that could delay any approval for American firms. Market makers play an important role by offering consistent buy and sell prices for ETFs, which helps investors trade more smoothly and affordably. In China, licensed market makers benefit from lower transaction fees and fewer trading restrictions. If approved, Citadel Securities, Jane Street, and Optiver — a Dutch firm — could be among the first global companies to enter the market.
China’s ETF sector has grown by 134% in just two years to a value of $510 billion. It is now the second-largest ETF market in the Asia Pacific region after Japan. While foreign companies have been granted more access to China’s financial markets in recent years, many have become cautious due to geopolitical tensions and the country’s economic slowdown. Indeed, firms like Fidelity International, Morgan Stanley (MS), and Legal & General reduced their presence in mainland China last year.
Is MCHI Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on the iShares MSCI China ETF (MCHI) based on 123 Buys, 436 Holds, and four Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average MCHI price target of $61.03 per share implies 24.4% upside potential.
