Regulators Crack Down on Unlicensed Operators in Asset Management Sector

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Analyst says that China’s financial regulators are specifically targeting the unlicensed sale of investment products with the release of a rash of new directives including regulations governing online gold transactions.

Public comments on the draft version of the “Internet Gold Business Provisional Administrative Measures” prepared by PBOC’s Financial Markets Department closed today, marking the imminent launch of another key set of regulations since the implementation of new asset management guidelines at the end of April.

The Measures outline a clear demarcation of roles for the online gold market, stipulating that internet companies serve as brokerages who are prohibited from  providing any form of gold account services.

Xue Hongyan (薛洪言), an online finance analyst with Suning Finance, said to Securities Daily that the new regulations are one of number of directives issued in relation to the asset management sector, that specifically target the provision of investment products by unlicensed operators.

These include the “Notice Concerning the Expansion of Rectification of Internet Asset Management Operations and the Undertaking of Inspection and Collection Work”  (关于加大通过互联网开展资产管理业务整治力度及开展验收工作的通知) issued by the Internet Rectification Office at the end of March, which was subsequently followed by the official launch of sweeping new asset management rules on 27 April.

“Asset management operations comprise a hundred trillion yuan market, and the launch of the new asset management regulations basically confirms that only license-holding institutions will be qualified to release asset management products,” said Xue.

“Online companies that do not hold licenses can only apply for commission sales qualifications, confirming the limitations and ceiling for asset management operations by unlicensed institutions.”

Xue points out that there are currently two main types of online gold investment products on the Chinese market – the first being the ETF’s or paper gold that are sold by licensed financial institutions, which will not be affected by the new regulations.

The other category involves the issuance of gold products, which the new internet gold measures designate as being in breach of regulations.

According to Xue regulators will in future include unlicensed providers of exclusive investment products,  involving precious metals or commodities, within the purview of a unified and standardised regulatory framework.

 

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