Citigroup has obtained regulatory approval to establish a wholly owned securities firm in China, marking a significant development after a five-year process. The announcement was made by China’s securities regulator recently and permits the US bank to provide a range of services including equities brokerage, securities underwriting, securities research, and principal trading within the mainland market.

This regulatory green light arrives amid ongoing efforts by Washington and Beijing to manage their strained economic relationship, which deteriorated sharply during the tariff and trade conflicts of recent years. The move follows the recent approval granted to Visa, allowing the American payments company to set up bank card clearing operations in China, signaling a broader opening of China’s financial sector to foreign institutions.

Citi first applied for the securities licence in late 2021, following China’s regulatory changes that permitted foreign companies to wholly own securities businesses domestically. These reforms were part of trade agreements made during the first term of former President Donald Trump. Other major US banks such as Goldman Sachs and JPMorgan had already transitioned their Chinese joint ventures to full ownership in 2021. However, optimism about further market liberalization and expansion into wealth and asset management sectors tempered as economic growth in China slowed and bilateral relations cooled.

Citi’s CEO Jane Fraser highlighted the bank’s long history in China, noting that the approval would enable the firm to better serve clients in an important market. Citi’s China country head, Wenjie Zhang, emphasized plans to build a strong local team and leverage its global network to support domestic capital market development.

Despite this progress, challenges persist for foreign firms in China's financial markets, where state-backed institutions retain dominant positions. Jamie Dimon, CEO of JPMorgan, recently remarked that parts of the bank’s investment banking business in China had significantly declined, though he acknowledged improvement in China’s consistency in international engagements this year.

Last year, several Wall Street banks reported record net profits in China, primarily driven by trading and brokerage activities, reflecting continued opportunities in certain business areas. Citi’s new licence is expected to enhance its ability to compete in China’s evolving capital markets as diplomatic and economic ties between the US and China remain closely watched ahead of an upcoming meeting between Presidents Xi Jinping and Donald Trump at the Asia-Pacific Economic Cooperation forum in Shenzhen.