PBC released a notice to further clarify issues related to the guidelines on regulating asset management businesses of financial institutions. The notice was formulated to prevent and control financial risks more effectively, encourage flow of private capital into the real economy, and provide better support for structural adjustment and upgrading of the economy.
The guidelines on regulating asset management businesses of financial institutions have played a positive role in improving order in the asset management market and preventing financial risks. To better implement the guidelines, PBC worked with CBIRC and CSRC to formulate this notice. The aim of this notice is to clarify operational issues in the transition period and facilitate the smooth implementation of the guidelines. The notice provides clarification on the following three aspects:
- Defining the investment range of publicly offered asset management products. The notice further elaborates on Article 10 of the guidelines and stipulates that, besides standard credit assets and stocks of public companies, publicly offered asset management products can also invest, as appropriate, in non-standard credit assets. Such investment shall comply with the regulatory requirements on maturity alignment and limit management and information disclosure for non-standard credit asset investment, as stipulated in the guidelines.
- Clarifying the valuation method for asset management products during the transition period. Given that some assets cannot be measured by market value yet, asset management products that are opened regularly and are in closed-end operation for more than half a year in the transition period, in addition to the bank cash management products, can be measured by amortized costs during the transition period.
- Clarifying macro-prudential policy arrangements in the transition period. To implement the requirement of ensuring smooth transition in the guidelines, the notice clearly states that stock of non-standard assets, which are not resolved after the end of the transition period, can be returned to the balance sheets of banks. PBC shall appropriately adjust relevant parameters in the Macro Prudential Assessment. For non-standard assets, which cannot move back to the balance sheets for special reasons, and for a small number of equity assets, which have not yet matured after the end of the transition period, the notice makes it clear that financial institutions may properly deal with them under the approval of financial regulatory authorities.
Keywords: Asia Pacific, China, Banking, Securities, Asset Management, Transition Period, Macro-prudential Policy, CBIRC, CSRC, PBC
Previous ArticleCSRC Proposals on PE Asset Management Business of Securities Firms
EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).
APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.
BCBS and FSB published a report on supervisory issues associated with benchmark transition.
IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.
ESMA updated the reporting manual on the European Single Electronic Format (ESEF).
EBA published a statement on resolution planning in light of the COVID-19 pandemic.
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework
ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.
FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.