The final version of the new rules for China’s CNY 100trn asset management industry has now been published by the Chinese financial regulators. In this Executive Interview, Aidan Shevlin, Head of Asia Pacific Liquidity Fund Management, J.P. Morgan Asset Management, explains the implications of the new rules for the industry, and for corporate treasurers, whilst outlining practical steps for rethinking liquidity management practices in the country.
What are the new asset management industry rules? When do they come into force in China, and what will their broad impact be?
Officially known as the ‘Guiding Opinions on Regulating the Asset Management Business of Financial Institutions’, the new regulations represent a comprehensive restructuring of China’s asset management industry. Introduced by the new Financial Stability and Development Committee (FSDC), the rules are designed to reduce financial risks, simplify products and increase investor protection.
The new rules came into force on 27 April 2018. As of now, all newly created Asset Management Products (AMPs) must comply with the rules; while existing AMPs have until the end of 2020 to be fully compliant.
These regulations signify a major change in how financial institutions will operate. As a result, there will be important implications for banks and fund managers, as well as knock-on effects to investors, issuers and markets. Corporate treasurers may therefore have cause to rethink their liquidity management structures in China, as well as reassessing the counterparty risk of their banking partners in this space