A landmark breakthrough has been achieved by a foreign bank in China's public fund custody sector. Standard Chartered Bank (China) Limited has announced that it will provide custody services for the Guotai Haitong Hong Kong Stock Advantage Select Equity Fund, issued by Shanghai Guotai Haitong Securities Asset Management Co., Ltd. This makes Standard Chartered China the first foreign bank to act as custodian for both a publicly offered QDII fund and a promoter-funded fund.
This development occurs against the backdrop of rapid expansion in the QDII market. Data recently disclosed by the Asset Management Association of China shows that as of the end of January 2026, the scale of QDII funds reached 1.03 trillion yuan, an increase of 44.986 billion yuan from 981.559 billion yuan at the end of 2025, officially pushing the QDII fund market past the trillion-yuan threshold.
The growth in cross-border investment demand is creating new entry points for foreign institutions to deeply participate in China's wealth management market. In December of last year, the Chairman of the China Securities Regulatory Commission pointed out that stocks and funds currently account for about 15% of Chinese residents' assets, indicating huge demand and potential for asset and wealth management services. The concept of diversified and multi-asset allocation is becoming increasingly popular.
QDII funds, due to their cross-border nature, present significantly greater complexity and uniqueness in custody requirements compared to domestic funds. These requirements include coordination between domestic and foreign custodians, and handling settlements, investment supervision, accounting, and regulatory reporting across different time zones, markets, and currencies. Through this business initiative, Standard Chartered China is extending its established service solutions for other QDII products into the publicly offered QDII fund domain.
The President and Vice Chairman of Standard Chartered China stated that the immense development potential of China's wealth management market offers broad opportunities for foreign financial institutions. Looking forward, the bank will leverage its strategic position as a 'super connector' to deepen its presence in the Chinese wealth management market, support the high-level opening-up of China's capital markets, and assist domestic investors in achieving better global asset allocation.
Looking back, Standard Chartered Bank began its custody business in China as early as 1992 and has since participated in and facilitated various two-way cross-border investment schemes. In October 2018, Standard Chartered China became the first foreign bank to obtain a securities investment fund custody license and successfully executed the first public fund custody business by a foreign bank in May 2021.
Regarding this milestone cooperation, Guotai Haitong Asset Management stated that the collaboration with Standard Chartered China is not merely a product innovation but also a significant practice in serving the national strategy for high-level financial opening and promoting two-way capital flows. By utilizing the publicly offered fund product structure, both parties are genuinely implementing inclusive finance to meet investors' cross-border investment needs.
As a leading asset manager with assets under management exceeding 700 billion yuan, Guotai Haitong Asset Management views the launch of the first publicly offered QDII product custodied and distributed by a foreign bank as an important step in the cross-border development of its public fund business.
It is noteworthy that during this year's National People's Congress sessions, a member of the National Committee of the Chinese People's Political Consultative Conference suggested expanding the QDII and R-QDII mechanisms to include individual clients, under the premise of ensuring closed-loop fund operations and meeting foreign exchange management requirements. This move, it was argued, could leverage the influence of 'China Investment,' help narrow the A-H share premium/discount, boost market valuations, facilitate the transformation of household savings into investments, increase residents' property income, and thereby unleash domestic demand potential.
An industry trend shows foreign banks collectively expanding into this area. A senior executive at a foreign bank in China previously indicated that custody is a target business for many foreign banks, with domestic fund custody being a crucial part. The number of foreign institutions involved in China's fund business is expected to grow, prompting proactive strategies.
In mid-2024, BNP Paribas (China) Ltd. received regulatory approval for its securities investment fund custody qualification, becoming the fourth foreign bank in China to obtain this license. Standard Chartered China was the first, followed by Citibank (China) and Deutsche Bank (China). After BNP Paribas, HSBC Bank (China) became the fifth foreign bank to receive approval.
In fund operations, a fund custodian is responsible for the safekeeping of all fund assets, executing the investment instructions of the fund manager, supervising the fund manager's investment activities, and verifying the net asset value calculations and financial statements prepared by the fund manager. This means institutions with fund custodian qualifications have stronger business ties with fund companies compared to those without.
Industry insiders note that foreign banks are expanding from public fund management into the entire industry chain, including custody, distribution, and investment advisory services. However, they face challenges such as high system integration costs, relatively higher fee standards, and the need to build greater brand recognition.
At the regulatory level, the healthy development of the QDII market has been incorporated into the top-level design for high-level financial opening. In June 2025, the State Administration of Foreign Exchange allocated $3.08 billion in new QDII investment quotas, systematically meeting market investment demand.
While the fund custody business itself may not be highly profitable, it can lead to derivative business opportunities such as attracting institutional accounts and facilitating Fund of Funds operations, which contributes to the diversification of an institution's business portfolio.
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