As China’s financial institutions gear up to operate under a new regulatory regime for the RMB 100 trillion ($14 trillion) asset management industry, authorities have clarified rules about the types of investment they will be able to offer customers, reported Caixin.
The People’s Bank of China (PBoC) and banking and securities watchdogs have jointly released draft rules stating that standard credit assets refer to asset-backed fixed-income securities, including government bonds, central bank bills, local government bonds, financial bonds, debt financing instruments of non-financial companies, corporate bonds and negotiable certificates of deposit, according to the draft rules published on the PBOC’s website on Saturday.
Banks previously complained that some aspects of the new system were unclear, in particular the definition of standard and nonstandard credit assets which are backed by debt.
The distinction is significant because as part of the new system, the China Banking and Insurance Regulatory Commission (CBIRC) in 2018 imposed restrictions on how much of their wealth management products (WMP) banks could invest in nonstandard assets, limiting them to 4% of their total assets or 35% of the net assets of their WMP.
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