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    CBIRC Measures Address Liquidity Risk of Wealth Management Products

    December 17, 2021

    The China Banking and Insurance Regulatory Commission (CBIRC) published measures for liquidity risk management of wealth management products of wealth management companies, along with key questions and answers (Q&As) related to these measures. The term "wealth management companies" as used in these measures refers to the wealth management subsidiaries of commercial banks that are legally established in the territory of the People's Republic of China and other non-bank financial institutions that are mainly engaged in wealth management business approved by CBIRC. The measures set out provisions on governance structure and management measures, investment transaction management, subscription and redemption management, and cooperative institution management. These measures shall come into effect on May 10, 2022.

    The measures set out the following key provisions:

    • Wealth management companies shall establish effective corporate governance and management and control mechanisms, improve various management systems, and implement these effectively.
    • Wealth management companies shall integrate liquidity risk management throughout the entire process of wealth management business operations.
    • A wealth management company shall strengthen the management of the subscription of wealth management products, reasonably control the concentration of investors, and prudently analyze and evaluate large-value subscription applications.
    • A wealth management company shall, in accordance with regulations, submit to CBIRC or its dispatched offices the statistical statements, external audit reports and other materials as required. A wealth management company shall incorporate the overall liquidity risk management of wealth management products into its annual financial management business report and submit it to the CBIRC or its dispatched office within two months of the end of each year.
    • When wealth management products appear to, or may, have major liquidity risks, wealth management company shall promptly report to CBIRC or its dispatched offices and submit countermeasures.

     

    Related Links (in Chinese)

    Effective Date: May 10, 2022

    Keywords: Asia Pacific, China, Banking, Securities, Wealth Management Products, Asset Management Company, Q&A, Governance, Liquidity Risk, PBC, CBIRC

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