China Tightens Fund Management Rules For Investment Trusts
The China Banking Regulation Commission has issued new fund management rules for
investment trusts in a bid to strengthen investor protection and provide more
certainty for clients in an often risky market.
The new rules, which took effect early in December, set out a regulatory framework
for custodians of pooled funds, detailing disclosure requirements and limits
on investments. In addition, the rules limit the size of an investment for a single transaction
to 50% of the total investment plan for the pooled funds within an accounting
year. The CBRC also wants investment trusts to establish a reporting system to monitor
investments, and establish systems for funds being held by custodian banks. The Commission acknowledged that before the new rules were introduced, clients
who had entrusted money to fund managers had not been adequately protected or
informed of potential risks. "It is a significant move made by the regulator to intensify the supervision
of investment trusts," the CBRC stated. A comprehensive report in our Intelligence Report series examining offshore investment, offshore stock exchanges, and hedge funds is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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