AMAC urges China’s asset managers to embrace diversification

12 March 2014   Category: News, Asia, China, Global   By Hui Ching-hoo

The Asset Management Association of China (AMAC) has added weight to the revised Securities Investment Funds Law, which came into force last June, by calling on its members to explore multiple business structures and diversify their business models.

The law expands the playing field for the principal shareholders of fund management companies that were previously restricted to financial institutions engaged in securities, securities investment consultancy, and trust asset management.

AMAC said on its website that the initiative loosens the threshold for financial entities to build up positions in asset management firms, which would help pave the way for asset managers going public in future.

Mainland asset managers currently operate as limited liability companies. The regulator would have to reform its existing structure to enable asset management firms to list on the stock exchange.

The association is encouraging asset managers to study the feasibility of various business structures such as general partnerships and shareholding models. It is also inciting its members to open their subsidiaries up to other sectors of the business such as asset outsourcing and enhanced risk management.

Separately, AMAC is coaxing asset managers to develop mechanisms that emphasise the alignment between risk and return, and to bolster their employees’ levels of risk awareness.