Home » just! The latest interpretation of the new requirements for the supervision of “Big Mac” monetary funds is here – yqqlm

just! The latest interpretation of the new requirements for the supervision of “Big Mac” monetary funds is here – yqqlm

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January 14, important for perfectioncurrencymarketfundTo protect the legitimate rights and interests of fund share holders, the China Securities Regulatory Commission issued the “Interim Regulations on the Supervision of Important Money Market Funds (Draft for Comment)” to clarify the definition and evaluation of important money market funds, additional regulatory requirements and risks of important money market funds. Prevention and control and supervision and management mechanisms.

Industry insiders said that the introduction of the “Interim Regulations” does not mean that a large-scaleMonetary FundThere are risks, but from the perspective of risk prevention and control, “planning for a rainy day” reflects a certain forward-looking. The “Interim Regulations” will help improve the regulatory framework and promote the high-quality development of important money market funds and public fund industries.

Clearly define and assess the scope

According to Article 2 of the “Interim Regulations”, an important money market fund is defined as: due to the large scale of fund assets or the large number of investors, and strong correlation with other financial institutions or financial products. Money market funds that may have a material adverse effect on the capital market and financial system in the event of a material risk.

Article 4 of the “Interim Regulations” further clarifies the evaluation scope, standards and procedures of important money market funds: First, it is specified that a single fund has a net asset scale of more than 200 billion yuan for 20 consecutive trading days, or the number of investors is more than 50 million, etc. If the conditions are met, they shall be included in the scope of participation, in which different money market funds managed by the same fund manager and sold by the same sales agency shall be calculated on a consolidated basis.Depend onfund companyActively report to the CSRC within 10 working days.

Secondly, the China Securities Regulatory Commission will evaluate the participating products, determine the final list and publicize it. The evaluation criteria mainly include four indicators: scale, relevance, substitutability and complexity.

Third, for products whose size and number of investors have not met the above conditions for three consecutive months, the CSRC may remove them from the list of important money market funds.

Wind data shows that as of the end of the third quarter of 2021, a total of 18 fund companies have managed money market funds with a total scale of more than 200 billion yuan. However, the “Interim Regulations” emphasize that the funds managed by the same fund manager must be sold in the same sales agency before they can be consolidated.

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Tighter prudential requirements for important money market funds

The “Interim Provisions” put forward relevant requirements for fund managers, custodians and sales agencies of important money market funds in terms of business investment philosophy, investment ratio, transaction behavior, scale control, application and redemption management, sales behavior, and risk reserve accrual. Stricter prudential requirements than conventional funds.

In terms of business and investment philosophy, the “Interim Regulations” require that fund companies shall not blindly expand the size of the fund on the basis of following the long-term and stable business philosophy and investment philosophy. etc. shall not be directly or indirectly linked to the size of the fund.

In terms of internal management requirements, the “Interim Regulations” require that fund managers should allocate special investment research, trading, risk control, compliance, operation, auditing and other positions for important money market funds, and relevant positions should have positions for more than 3 years. There shall be no less than 2 fund managers of important commodity market funds with working experience. Fund managers and fund custodians shall establish two or more application-level disaster recovery systems.

In terms of investment indicators, the “Interim Regulations” require: the holding ratio of a single investment target will be reduced from 10% of conventional funds to 5%; the upper limit of holding liquidity-restricted assets will be reduced from 10% to 5%; the minimum proportion of cash assets will be reduced. Raised from 5% to 20% with a clear deadlineBankThe proportion of deposits shall not be higher than 50%; the upper limit of leverage ratio is lowered from 120% to 10%, and the upper limit of remaining term is lowered from 120 days to 90 days. In addition, important money market funds with a scale of more than 500 billion yuan are not allowed to operate under normal market conditions, and the remaining period is further reduced to 60 days.

In terms of investor structure and scale control, the “Interim Regulations” require that large-value subscription applications be prudently confirmed to avoid the situation where the shares held by a single investor exceed 5% of the total fund shares after accepting a subscription application from a single investor; a single investor holds shares. If it exceeds 5% of the total fund shares, the fund manager shall make binding arrangements with relevant investors in advance on the redemption behavior, including but not limited to the net redemption shares in a single day shall not exceed 5% of the total fund shares, and the payment shall be postponed. Redemption funds and other measures; prudently confirm huge redemption applications in accordance with laws and regulations, and report to the CSRC on the day when the huge redemption occurs.

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In terms of sales management, the “Interim Regulations” require that the scale, market share, fund manager, history of important money market funds shall not be unilaterally publicized.performanceDiscriminatory sales arrangements for other funds shall not be implemented.

In terms of risk reserves, the proportion of risk reserves drawn by fund managers and custodians from the management fees and custody fees of important money market funds each month shall not be lower than 40% and 20%, respectively;Fund salesInstitutions shall establish a risk reserve mechanism for important money market funds, and the proportion of risk reserves drawn from all sales income of important money market funds every month shall not be less than 20%.

Pay attention to the balance of risk prevention and control and supervision and management mechanisms

The “Interim Regulations” clarify the risk prevention and control and supervision and management mechanisms of important money market funds.

First, fund managers and relevant market entities are required to jointly formulate reasonable and effective risk response plans, and make arrangements for risk disposal in advance.

The second is to specify the risk disposal team mechanism in the case of major risks, as well as the risk disposal responsibilities and requirements of market entities such as fund managers.

The third is to stipulate that the fund manager’s own funds, risk reserves, mainshareholderand other sources of funds for disposal.

When there is a major risk in an important money market fund, the fund manager shall limit the remuneration of directors, supervisors and senior executives, and shall not issue bonuses and performance-based remuneration to directors, supervisors and senior executives, or pay shareholders to shareholders.Dividend, Provide external loans, guarantees or make major investments, and allow directors, supervisors and senior executives and key responsible personnel to resign.

In terms of loss compensation and liquidity support, fund managers, fund custodians and fund sales agencies havecontractIf the fund property or the lawful rights and interests of the fund share holders are lost due to reasons such as operational errors, technical failures, etc., and should be liable for compensation in accordance with the law, the risk reserve may be used preferentially for compensation. Approved by the China Securities Regulatory Commission, the risk reserves of fund managers, fund custodians and fund sales agencies can be used for liquidity support of important money market funds.

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In terms of short-term financing arrangements, the fund manager shall sign an agreement with major shareholders, fund custodians, etc., stipulating that in the event of a huge redemption of an important money market fund, it maypledgerepoShort-term financing arrangements can be obtained within a certain amount through transactions and other means.

Balance development and risk prevention

According to ChinasecuritiesAccording to the data released by the Investment Fund Industry Association, as of November 2021, the overall scale of public funds was 25.32 trillion yuan, of which currency funds reached 9.86 trillion yuan, accounting for 38.94% of the scale of public funds. Monetary funds have the characteristics of low investment threshold, high security, good liquidity, and low investment cost. The number of investors exceeds 500 million, and it is an important public offering product serving the majority of investors. The “Interim Regulations” drafted in this context will help promote the high-quality development of important money market funds, better practice inclusive finance, and serve investors’ wealth management.

According to the person in charge of the relevant departments of the CSRC, the “Interim Regulations” are based on the experience of the international market, from the perspective of asset management products, focusing on the combination of macro-prudential and micro-regulation, which will help fill the regulatory gap and improve the regulatory framework.

Industry insiders said that the “Interim Regulations” made stricter and prudent regulations on the investment and operation indicators of important money market funds, and focused on compacting the main responsibilities of institutions, and made forward-looking arrangements for risk prevention and control, which is conducive to improving the resilience of the industry’s development and public offering. The fund industry will adhere to the principle of “steadiness at the forefront and seeking progress while maintaining stability”, and pay more attention to the balance between overall development and risk prevention.

(Article source: Chinasecuritiesnewspaper)

(Original title: Just now! New requirements for “Big Mac” monetary fund supervision are solicited for comments, the latest interpretation is here)

(Editor in charge: 92)

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