The China Banking and Insurance Regulatory Commission has released new draft rules and guidelines for the regulation of its asset and wealth management sectors.

China has released draft rules and guidelines to strengthen the regulations of financial institutions’ wealth management and asset management businesses, according to Reuters.

Last week, the newly-established China Banking and Insurance Regulatory Commission (CBIRC) released the draft rules for commercial banks’ wealth management products (WMPs), saying that these WMPs should be managed based on their net value.

Banks must also standardise the management of their fund pools to prevent shadow banking risk.

The rules are designed to force banks to standardise their wealth management businesses and to invest WMP funds in the capital markets in the most compliant way. 

The regulators are trying to force banks to stop providing investors with implicit guarantees against investment losses. They also want banks to strengthen their liquidity management and undertake stress tests to control risk. Banks will not be allowed to use WMPs to invest in any bank WMPs or provide a “channel service” for other institutions to bypass regulations.

The proposal aims to oblige every client to make a 10,000 yuan ($1,472) minimum subscription. The present figure is 50,000 yuan