CSRC looks to restrict growth of fund houses
Print Edition
CHINA’S securities regulator said yesterday that it is considering new rules to make it more difficult for mutual fund companies to establish subsidiaries, in a bid to curb their expansion into shadow banking activities.
Since China allowed such firms to set up subsidiaries in 2012, the sector has grown rapidly, with 79 units now managing 9.8 trillion yuan (US$1.5 trillion) worth of assets, according to figures from the Asset Management Association of China.
“Some subsidiaries are operating away from their core business and expanding into high-risk areas, including shadow banking,” Deng Ge, spokesman for the China Securities Regulatory Commission, told a media briefing.
To counter potential risks, the regulator has drafted two sets of regulations that raise the thresholds for fund companies seeking to set up a subsidiary and tighten supervision over the units’ operation.
Under the proposed rules, fund houses will be required to have at least 600 million yuan in net assets and not less than 20 billion yuan worth of assets, excluding money-market funds, under management.
The subsidiaries themselves will be required to have net capital of at least 100 million yuan, and that figure should be not less than their total risk assets and at least 20 percent of their debt.
“The new rules would bar at least 60 mutual fund houses from setting up subsidiaries, putting a brake on savage growth of such units,” said Chen Fu, analyst with Guosen Securities.
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