The China Banking and Insurance Regulatory Commission released its long-awaited draft rules on commercial banks’ wealth management products on July 20. The latest move aims to fend off systemic risks in the financial sector.
You Yu, executive vice-president of Zhongrong International Trust, said, “There are detailed arrangements in the process of implementation of the wealth management rules.” The rules stipulate that WMPs should be managed based on their net value. You commented that the rules were vague before and now they give the markets clear expectations.
The rules also govern the investment scope of publicly raised asset management products. Those products now can invest in non-standard debt assets based on regulations on disclosure and quota limits. Financial institutions are now allowed to issue existing products to invest in new assets. However, those new assets should meet the financing needs of state major projects and SMEs first.
“There is no major change in the new rules, it sticks to the principles of the previous rules but focuses more on the implementation. It makes implementation and transitions smoother and more reasonable,” You represented.
Meanwhile, the new rules will lower the minimum amount of client subscription for any single public WMP to 10,000 yuan (about $1,447) from 50,000 yuan. The regulator and the central bank said the transition period for the new regulations will last until the end of 2020.