In order to set up China's first money-broker joint ventures, Icap, the world's largest interdealer broker, and rival Collins Stewart Tullett are in talks, as per their local partners. This was disclosed on Thursday. Regulators in China said this week that they would now permit money brokers, which would in turn trade products from short-term debt to foreign exchange spots on behalf of clients. This would be for the first time and only on a trial basis.

China Foreign Exchange Trade System (CFETS), (which is a unit of the central bank and the sole operator of the country's interbank markets), and Icap were in the final stages of discussions, according to Reuters source. An executive at the Chinese company’s board office told us this, while he was having a talk with the city government-backed Shanghai International Group Co. Ltd.  These two British firms, which act as middlemen between banks in securities markets are the world's largest interdealer brokers. A CFETS official also told us that talks are going on between both sides.

He further said that they are hoping of setting up a venture before the end of this year; which will be in foreign exchange cash lending and forex bond trading on behalf of clients. Money brokers would pave the way for a fully convertible yuan, which would assist Chinese companies to trade cash with overseas firms. Pressure is being exerted by trading partners of the United States and China to revalue the yuan, which is pegged at around 8.28 to the dollar. Critics are basically of the view that the yuan is hugely undervalued which, in turn, gives China's exporters an unfair advantage in international markets.