Eight of the provincial securities commissions have signed agreements with China’s banking regulator, paving the way for Canada to become a destination for Chinese banking wealth management business.

The Canadian Securities Administrators announced on Friday that the securities commissions of Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Québec and Saskatchewan signed Supervisory Cooperation Arrangements with the China Banking Regulatory Commission in relation to the Qualified Domestic Institutional Investor Program for Chinese commercial banks.

The program allows approved institutional investors in China, including banks and fund management, to invest funds pooled from their mainland clients in approved overseas financial markets.

The provincial regulators entered into the arrangement to strengthen the level of regulatory cooperation with Chinese regulators in order to develop the wealth management business of Chinese commercial banks in Canada, the CSA said.

“This supervisory cooperation arrangement paves the way for Chinese commercial banks to conduct investments on behalf of their clients with Canadian-based financial institutions regulated by CSA participating jurisdictions,” said Jean St-Gelais, chair of the CSA and president and CEO of the Autorité des marchés financiers (Québec). “This could attract new capital to the Canadian market and open new markets to Canadian financial institutions.”

Finance Minister Jim Flaherty welcomed the agreement.

“This agreement will give Canadian financial markets access to up to US$8 billion in investment capital,” said Flaherty. “This represents a strong vote of confidence in Canada’s economic prospects and the soundness of Canada’s financial system.”

The arrangement is currently in effect in seven of eight CSA participating jurisdictions. Subject to obtaining the requisite ministerial approval, the arrangement is scheduled to take effect in Ontario on June 22, 2010.

IE