CSRC releases new rules on asset managers’ self-owned capital
15 August 2013
By Hui Ching-hoo
The China Securities Regulatory Commission (CSRC) announced on August 9 that the regulator has unveiled a set of new initiatives to regularise fund management companies that invest with self-owned capital. The capital is increasingly being deployed to open or expand various asset management enterprises across the country.
Up to now, the usage of self-owned capital has been strictly controlled, with existing regulation stipulating that Mainland fund managers are only allowed to invest self-owned capital in sovereign debt, fund products, and the overseas entities of their firms.
The CSRC said in a statement that the new initiatives enable domestic asset managers to manage self-owned capital more effectively, in doing so facilitating the development of the fund and wealth management industries in China.
The initiatives come after the revised Securities Investment Funds Law came into force on June 1, broadening the major shareholder base of asset management firms from securities brokerages and securities investment advisory entities to include insurance institutions.
The CSRC notes that the move encourages insurance firms to establish their asset management arms in order to facilitate the development of the country’s fund management industry, and this to some extent is driving the rise in self-owned capital investments.
The measures are intended to reduce risks by strengthening the supervision of risk control, governance, the setting up of firewalls, and performance assessments for self-owned capital.
The CSRC noted that the measures encourage asset managers to invest in asset management-related businesses in order to bolster the industry’s competitiveness.
The regulator carried out market consultations between March 14 and March 29, receiving a total of 31 suggestions from 15 market practitioners.
Deployment of self-owned capital among Mainland asset managers is picking up pace. According to figures from the Asset Management Association of China, non-mutual assets of Mainland fund managers grew 27.22% month-on-month to 1.04 trillion RMB (US$165.5 billion) as of the end of July, accounting for 28.2% total AUM of the industry.
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