China has overhauled regulations governing the country’s $3 trillion trust industry, tightening oversight to help contain financial risks in a key area of the shadow banking sector that has become of increasing concern to authorities after a series of scandals and defaults, reported Caixin.
The new rules, which will take effect on Jan. 1, represent the first significant update of trust regulations since June 2015. They stipulate stricter requirements for shareholders and managers of trust companies, and tighten standards for those allowed to conduct investment business, according to a statement released Tuesday by the China Banking and Insurance Regulatory Commission (CBIRC). They also relax criteria for overseas financial institutions to invest in the sector and enhance corporate governance obligations.
“The measures aim to further strengthen regulatory guidance for the industry and enhance the effectiveness of supervision on companies entering the industry,” the CBIRC said in a statement adding that the changes were in keeping with the State Council’s reforms to “delegate power, streamline administration, and optimize government services.”
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