Regulation of the asset management market
Further to our previous articles on the regulation of the asset management and wealth management industries in Mainland China, the China Securities Regulatory Commission (CSRC) issued the Administrative Measures on the Private Asset Management Business of Securities and Futures Business Institutions (available here in Chinese) and the Provisions on the Administration of Operation of Privately Offered Asset Management Schemes of Securities and Futures Business Institutions (available here in Chinese) (collectively, the Measures) on 22 October 2018. The Measures, together with the Measures on the Supervision and Administration of Wealth Management Business of Commercial Banks (the Wealth Management Regulations) promulgated by the China Banking and Insurance Regulatory Commission (CBIRC) on 26 September 2018, constitute the detailed rules for implementing the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions (the Guiding Opinions, available here in Chinese).
The Measures and the Wealth Management Regulations, under the framework of the Guiding Opinions, provide comprehensive regulations for different market players in the Mainland Chinese asset management industry. The Guiding Opinions apply where the Measures and the Wealth Management Regulations are silent on an issue. The Guiding Opinions, the Measures and the Wealth Management Regulations came into immediate effect but allow a grace period for compliance until the end of 2020. The following is a comparison chart between the Measures and the Wealth Management Regulations.
|Measures||Wealth Management Regulations|
|Relevant regulator||CSRC, AMAC||CBIRC|
|Do the PRC Securities Investment Funds Laws apply?||Yes||<p>no; these=”” laws=”” do=”” not=”” apply=”” to=”” a=”” public=”” offering=”” of=”” wealth=”” management=”” products.<=”” p=””> </p>no;>|
|Regulated entities / product managers||Securities companies, fund management companies, futures companies, and their subsidiaries.||Subsidiaries of commercial banks (banks themselves are not allowed to promote or manage wealth management products), including Chinese-funded commercial banks, wholly foreign-funded banks and Sino-foreign JV banks.|
|Apart from private products, can product managers promote public products pursuant to the relevant rule?||No. Although some of the product managers may promote public products, such activities are not regulated by the Measures.||Yes|
|Independent custodians required?||Yes||Yes|
|External auditors required?||Yes||Yes, for public products only.|
|Central filing required for launch of each product?||Yes||Yes|
|Segregation of assets between product managers and products||Yes (as explained in a CSRC Q&A).||Yes (specified in the Wealth Management Regulations).|
|Principal / income guaranteed products||Not allowed||Not allowed|
|Conditions applicable to a successful launch||
|Restrictions applicable to proprietary investments in the products||
|Eligible qualifications of accredited investors for a private offering||Individual investors||Must have over two years’ investment experience, and one of the following:
|Institutional investors||Must have no less than RMB 10 million of net assets at the end of the previous year.|
In addition, the following restrictions apply to products managed by the same manager:
|In addition, the following restrictions apply to products managed by the same manager:
|Can structured products be open-ended?||No, must be closed-ended.||Yes|
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