China’s securities regulators have introduced a daily withdrawal limit from money-market funds, Caixin Global reports, in an attempt to rein in volatility in the RMB 7.8 trillion ($1.2 trillion) industry.
Investors will now be able to withdraw no more than RMB 10,000 ($1,558) a day from money market funds, according to a statement issued by China Securities Regulatory Commission with the People’s Bank of China.
The new limit comes as a package of new rules designed to reduce risk in China’s mutual asset market, 63% of which is made up from money market funds. Other measures include banning individuals and non-banking institutions from providing advances ahead of redemptions.
“Some fund managers and fund sales agencies have blindly expanded their businesses by promoting ‘instant large-sum withdrawals,’ said a CSRC spokesperson, adding that other institutions providing advances have cultivated a “sense of unlimited liquidity among investors.”