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Bank of America’s Merrill Lynch to allow RMB-denominated deposits in prime brokerage accounts

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Merrill Lynch, a subsidiary of Bank of America, has taken the decision to allow RMB and RMB-denominated securities to be

Merrill Lynch, a subsidiary of Bank of America, has taken the decision to allow RMB and RMB-denominated securities to be deposited by hedge funds into their prime broker accounts, reports Bloomberg. As China allows its offshore RMB market to deepen in Hong Kong, demand for RMB is beginning to build. These new services being introduced by Merrill Lynch will enable fund managers to position themselves as the mainland currency strengthens (since July the RMB has steadily appreciated, reaching 6.62 on November 11th). By offering RMB cash accounts hedge funds are able to create corresponding share classes, Merrill Lynch’s head of financing sales for APAC, Dan McNicholas (pictured), told Bloomberg. Furthermore, custody accounts will allow hedgies to buy RMB, RMB-instruments (principally bonds, of which a great many are now being issued in Hong Kong) and borrow against them. “Large international hedge funds used to use non-deliverable yuan forward contracts to make such bets,” Ben Williams, a member of McNicholas’ financing sales team, told Bloomberg. “These new services allow them to make the same bets through the potentially cheaper offshore yuan market.”

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