China plans to allow foreign banks to act as custodians in its $380 billion mutual fund industry for the first time, the latest move amid a raft of government reforms that seek to develop the country's financial system. But foreign banks are unlikely to pose much of an immediate threat to China's biggest state-owned lenders, who can leverage their unparalleled distribution power to win and retain clients. Draft rules were posted on the securities regulator's website on Wednesday evening and it is currently seeking opinions from the public. "In order to promote competition in the fund custody market, China plans to open the business to foreign players," the China Securities Regulatory Commission said in a statement. Some 18 custodian banks in China supervise 1,100 mutual funds worth 2.37 trillion yuan ($380 billion), according to data from the Commission as of end-September. This year, China has allowed foreign banks to distribute mutual funds and raised the ceiling of their
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