CSRC Pushes for Wealth Management Subsidiaries of Chinese Banks to Launch Mutual Funds


China’s securities regulator has issued new rules to encourage the wealth management subsidiaries of banks to become licensed mutual funds operators.

On 26 April the China Securities Regulatory Commission (CSRC) issued the “Opinions Concerning Rapidly Driving the High-quality Development of the Mutual Funds Sector” (关于加快推进公募基金行业高质量发展的意见).

The Opinions call for “actively driving commercial banks, insurance organisations, securities organisations and other high quality financial institutions to lawfully establish fund management companies.”

Key provisions of the Opinions also call for “adjusting and optimising the mutual fund licensing system, appropriately loosening the volume restrictions for mutual fund licenses held by the same entity, and supporting securities asset management subsidiaries, insurance asset management companies, bank wealth management subsidiaries and other specialist asset managers to apply for mutual fund licenses to engage in mutual fund management operations.”

While many of China’s commercial banks, brokerages and insurance companies already hold mutual fund licenses, the Opinions mark the first time that Chinese regulators have made reference to bank wealth management subsidiaries becoming licensed operators in the mutual funds space.

Zhou Yiqin (周毅钦), founder of Guanshao Consulting (冠苕咨询), said to state-owned media that obtaining mutual fund licenses would have major and unique strategic significance for bank wealth management subsidiaries.

“Having this license would be able to resolve equity product issuance difficulties, and be able to resolve remuneration mechanism problems,” said Zhou to 21st Century Business Herald.