Friday, 14 April 2017 05:30

Securities and futures "eight line under" version 2.0: further clear information technology business boundaries

By the China securities regulatory commission (hereinafter referred to as "CSRC") agree to approval.

the Chinese securities investment fund industry association (hereinafter referred to as the "industry association") issued on March 5, 2015 by the securities and futures business institutions to carry out the asset management business "eight line under the regulations prohibited behaviour" (hereinafter referred to as the "detailed rules"), and organization in Beijing, Shanghai, shenzhen, Hong Kong and conducted training and interpretation of the work, strengthen the industry understanding of the detailed rules and execution, guide the industry standard to carry out the asset management business.

"Detailed rules" since its launch, securities assets management business in the futures management agencies to get a degree of specification, not a fair deal, highly leveraged, non-standard behavior such as sale by the strict management, non-standard project the phenomenon of the current incentive situation more change. However, influenced by the early stage of the stock market abnormal fluctuation, the detailed rules about leverage requirements need to be adjusted, illegal engaged in securities and futures business activities as well as new situation such as the illegal investment adviser need to regulate. Considering the register put on record in the industry association, on the other hand, the private securities investment fund manager is growing rapidly, to strengthen the norms of business behavior, prevent business risks, avoid even the appearance of regulatory arbitrage, needs to be private securities investment fund managers into the unity of self-discipline management scope.

Because of this, the industry association for revision of the "rules"), launched by asset management business professional committee (hereinafter referred to as the "information technology committee") organization industry experts to "detailed rules" the content, form, discusses the applicable scope, analysis, and ask about the opinions of the regulators, the resident agencies and self-regulatory organizations, formed the securities and futures business institutions to carry out the asset management business "eight line under" prohibited behavior rules (draft revision, details) "(hereinafter referred to as the" new "" eight line under" rules ").

First, the detailed rules and the new revision, the "eight line under" details ", before and after the contrast table

According to detailed rules and the detailed rules for the detailed rules for the draft of the full text, make the following comparison table, including revised bold part to modify, the terms of the increase.

Second, the new "" eight line under" detailed rules "revision points

New rules of "eight bottom line" and "overall architecture and the detailed rules remain unchanged, the article content increased from previous article 13 to 16. New provisions of article 5, merge the original clause four to two.

(one) modify the scope of application

According to the "interim measures for the supervision and administration of private equity investment fund" relevant provision, combined with private registration and private equity fund managers for the record the actual situation, the new article 14, clear private securities investment fund managers on the new "" eight line under" detailed rules ", also reiterated that the asset securitization business shall not apply to the new "" eight line under" rules ".

(two) new to "engage in illegal securities and futures business activities" and "illegal" investment adviser behaviour prohibitive requirements

Regulatory requirements for the implementation of the securities and futures commission, according to the phenomenon of abnormal fluctuations in the stock market, combining with the actual situation of asset management plan investment securities and futures market information, in the process of the daily monitoring for the record and the new "" eight line under" detailed rules "add the following two prohibitive requirements:

1, article 7 of the illegal securities assets management business shall not engage in futures business activities or for illegal securities and futures business activities provide trading convenience. In July 2015, the China securities regulatory commission issued "on the opinions of the rectification of illegal securities business activities" (SFC announcement [2015] 19), deployment is carried out for the rectification of illegal securities activities. Inspection found that part of the asset management plan is an external have points storehouse function of information technology system and the setting up of a sub account, account irregularities, virtual account, umbrella behavior, such as information technology products for the implementation of the securities and futures commission regulatory requirements, new article mainly from the account of the real-name system, control account, external trade system, and set up the umbrella information product four aspects to ban the asset management plan for the illegal securities and futures business activities provide services or facilities.

2, article 9 of the asset manager shall not illegal employ third party as investment adviser of asset management plan. At present, the securities and futures investment adviser business institutions and more, the condition of the investment advisory role in the process of asset management plan is becoming more and more big, and the conditions of the investment adviser, ability and cooperation mode will have great influence to the interests of the investors. Through monitoring for the record, found that part of the asset management plan is not fully disclose information investment adviser not unified, investment consulting, investment consulting requirement power and responsibility is not clear, the problems such as nonstandard investment consultant fees, the risk is bigger, it is necessary to regulate. Article 9 of the new basic requirements from the investment adviser, investment consultant selection and hiring of, investment advisory information disclosure and responsibility agreement, to prevent conflicts of interest and investment consulting fee payments made a clear requirement, in order to further standardize the behavior of the securities and futures management agency hired investment consultant. To be sure, the new rules of "eight bottom line" and "specifically prohibits individuals as investment advisers, and banning investment advisers and its affiliated parties for its self-owned capital to invest in structured asset management plan, with clear role between investment advisers and investors, to prevent potential conflicts of interest.

(three) modify the "asset management plans to leverage design" and "pool"

1, article 8 of the asset management plan shall not contravene the "benefit-sharing, risk-sharing" basic principles, directly or indirectly for structured assets management plan priority share applicants provide capital preservation, guaranteed income arrangement; The asset management plan shall not violate the lever design match the risk benefit principle. After the detailed rules of structured asset management plan to leverage the limitation of the highest shall not exceed 10 times, played a role in risk prevention and control. With the unceasing change of market conditions, the category of the asset management plan is rich, it is necessary for different categories of asset management plan set different leverage ratio limit, further reflect the actual risk status of the asset management plan. This article is mainly to do the following changes:

One is the difference between asset management products and differences between the nature of equity financing, return to the asset management business "benefit-sharing, risk-sharing" source, explicitly banned structured asset management plan, directly or indirectly provide priority share applicants break-even arrange insurance benefits. For example, prescribed for priority income provision in advance, early termination payment difference up, contract and other essentially share priority applicants provide the arrangement of insurance benefits, etc.

Second, according to the investment scope and investment proportion structured asset management plan can be divided into stock, futures, fixed income, non-standard, mixed classes and other classes, and according to the different categories of product market risk volatility of corresponding different leverage ratio upper limit. Will have a higher risk of stock products cut to 1 times the maximum leverage by 10 times, the main consideration of the current stock market actual situation as well as the overall regulatory guidance, at the same time also set to mixed type of leverage to 1 times, mainly to prevent to "false hybrid true stock" products to dodge the foregoing circumstances. Considering for the management of employee stock ownership plan to set up a structured assets management plan has certain particularity, the new "" eight line under" detailed rules "appropriate to relax its leverage to no more than two times. In addition, in order to further control the investment risk, reduce the investment of leverage, with reference to the public to raise the measures for the administration of securities investment fund operation rules, the new "" eight line under" detailed rules "clear collection asset management plan (" one to many") total assets shall not exceed 140% of net assets.

Three is to increase the structured information disclosure of asset management plan, the requirement to the structural design and the corresponding risk situation, income distribution, risk control measures, such as information disclosure.

Four is to leverage ratio calculation formula is adjusted for "priority after the share/carrier class share", make it more clean, clear canister, was consistent with market practice.

Five is the name of a structured asset management plan must include the "structural" or "classification", in order to fully reveal the risk nature of the structured products.

Six is strictly structured assets management risk prevention and control plan, structured nested asset management plan are forbidden from investing in other structured financial products.

2, article 10 shall not be in the pool. For pool "rollover, collection operation, term mismatch, separate pricing", the characteristics of the new "" eight line under" detailed rules "on the basis of the original expression made a further refinement, increase the" asset management plan is not actual investment, only to later investors money elsewhere early investors principal and earnings ", "asset management plan investment can't payment on time, to participate in the exit or rollover way through open late by investors to take risks" prohibited behaviour, such as the key to prevent similar "ponzi scheme" pool products. In addition, the new "" eight line under" detailed rules for the asset management plan to provide non-standard assets any direct or indirect, dominant or recessive guarantee or repurchase commitment is banned, prevent beyond the scope of the risk asset management plan.

(four) to further regulate the behavior of sales promotion

1.ban on the sale personnel of qualified investors to raise funds in a disguised form, that is banned by many people together or short-term borrowing fill approach of minimum investment asset management plan.

2. it is banned in disguised forms to expand the number of investors, namely prohibited by setting up multiple investment targets with the types of asset management plan is exactly the same limit disguised hits 200.

3. expected rate of return to investors prohibits asset management plan, including expected earnings, oral propaganda products may not be in the promotional material, information technology has written in the contract text materials such as "earnings", "expected income" and other words.

4.ban on asset management plan promised to investors in any way the principal against losses or promise the lowest income of name of a specific asset management plan shall not appear "break-even", may not exist in the asset management contract and sales materials contain the expression of connotation of the insurance benefits.

(five) increase discipline and commentaries on the terms and conditions

The new "eight line under" detailed rules "article 12 increased the fund industry association in violation of regulations behavior principle requirements of disciplinary action. If the circumstances are serious, can be handed over to the China securities regulatory commission. Article 15 for structured assets management plan and related categories, the affiliated party definition, market fair price meaning explanation.

Three, the new "" eight line under" detailed rules "in-depth

Clear control could leverage, reduced leverage a few a foregone conclusion

the new "" eight line under the current" detailed rules ", stock, mixed factor more than 1 times of the asset management plan; To conform to the regulations of employee stock ownership plan set up stock assets management plan leverage multiples of more than 2 times. Futures, fixed income, non-standard type of asset management plan leverage multiples of more than 3 times. Other type of asset management plan leverage multiples of more than 2 times. The original "detailed rules" only regulation graded asset management plan shall not exceed 10 times leverage multiple.。

In fact, the adjustment and hierarchical structured products in recent years in the information technology product size proportion is rising. Regulatory requirements more information technology products from lower lever "ceiling" again, and a-share shock plate behind the financing structure adjustment. On the other hand, the adjustment of the policy may also result in structured class information technology products. The effects of volatility of the stock market to the high bar products are profound, carried out in accordance with the 10 times leverage, really do 10 times leverage is not much, but when you meet the extreme market 3-4 times leverage is difficult to bear. Highly leveraged products is easy to appear the indemnification, limited leverage, after the first shock must be structured products, and the introduction of priority on the secondary market investment, overweight, or increase, dozen new business also will be subject to certain restrictions.

Through the through the verification, fix the nesting of structured products

New rules of "eight bottom line" and "put forward by penetrating verification, structured investment asset management plan nested other structured financial products. Penetration is mainly to prevent risky products to low risk tolerance error sales, to prevent financial institutions through structure design to evade regulation at the same time, however, from the perspective of macro-prudential prevent because systemic crisis in regulatory limbo. Simple speaking, penetrating mainly to consumer financial information transparency, also to regulatory transparency.

For classification of products on the direction of the underlying assets of penetration and leverage, graded products in trust and securities fund is widely used in the pipe. But the concept of hierarchical bank finance product not mentioned in the regulations of the banking regulatory commission (CBRC) system. Most places still enforce a limit the bank the proportion of the products classification, such as the secondary market investment proportion is not lower than 1:3, the bank part priority relative to at least 25% of the safety cushion, the creditor's rights and properties. From the current rules CBRC bank classification products through written rule a complete blank, for the oral instruction, around the difference is larger, local authorities are most typically do not adopt the penetration of caliber. Especially bank by priority with information and investment in the trust plan execution and brokerage funds could not penetrate. Obviously also have certain rationality, because if from the perspective of the risk and return in general as long as a clearance control is better, bad proportion is too low, after partial debt attribute is strong, don't need to penetrate to the more specific the underlying asset; But the stock market in July violence to leverage the facts show that even in the micro level of individual does not need to penetrate, from the Angle of the macro-prudential still need to grasp the capital flow to the bottom of the assets as a whole. But the current system of financial products for the record does not support the macro-prudential through regulatory conditions.

(3) added "for the record product not through the verification", private equity fund managers should be brought into the self-discipline management

According to the new "" eight line under" detailed rules ", the "sales asset management plan to the qualified investors, or accumulated more than 200 the number of investors may not conduct asset management business", on the basis of further defined "if more of the same asset managers with exactly the same types of asset management plan of investment target, should be combined to calculate the number of investors". This means that the previous industry association rules "for the record product not through the verification" further supplement, if there are two or more organizations through nested information plan, finally, at the same time to invest in a project, you should merge the number of investors, upper limit of more than 200 people will be treated as violation.

"Draft" private fund managers should be brought into the self-discipline management, as well as the asset management business engaged in the illegal securities and futures business activities or for illegal securities and futures business activities provide trading convenience to explicitly prohibited provisions, strengthen the industry standard of the asset management business, is conducive to the whole industry and the industry behavior formed unified compliance standards and behavior, to promote the benign competition and standardize the development of the industry.

(4) clear the frontiers of regulation, guide and standardize the investment adviser

"Draft" clear negative natural person can not do, repudiated the umbrella could plan to do after the bad on the operating mode. In addition to "essentially take the functions of investment advisers" into the regulatory scope, adhering to the principle of substance over form. Umbrella could plan generally will contract: hold a public offering of shares of listed companies, shall not exceed 5% of the outstanding shares of listed companies (including) and 10% of the outstanding shares (including), and shall not be a cause in the name of the trustee to hold shares of listed companies accounted for 5% of the outstanding shares of listed companies (including) above. But the investment adviser in different asset management company operating the product, because in the tube to open an account in the name of the plan, often gets around by more than 5% shall sign and so on the relevant provisions, and thus prone to operation market, insider trading, etc. Shanghai private-equity bosses Xu Xiang captured the important reason is the market operation, and he is one of the main identity as a investment adviser of private information technology products. Fails to provide essential services not, that is, purely for the purpose of the transfer fee of financial advisers, simply introduces financial advisers can't accept customer's financial advisers. Emphasis on investment consultant shall not, in its own funds and structured information plan, but investment advisers can investment with self-owned capital flat layer of information technology program or a single customer information.

(5) pool of funds business prohibitive for strengthening '

Citic prudential to about 22.5 billion in cash management plan and short-term plan, into some duration, more than one year to non-standard special plan assets. As of June 2015, the relevant asset management plan to dozen. When only a short-term financial planning into the open period, its holdings of non-standard special plan will be transferred to other open not open issue of short-term financial planning and the daily cash management plan, and then subscribe to stay open ends into the other open issue of short-term financial planning is the transfer of the non-standard special plan, or other non-standard special subscription plans. For citic prudential irregularities in the pool behavior of the business, the industry association to provisional filing for six months on the behavior of disciplinary action, and shall be ordered to citic prudential about the asset management plan to clean up and rectification.

Summarizes the operation mode characteristics of citic prudential fund industry association mainly has the following three points: (1) the source of funds and asset liquidity mismatch. Open daily cash management plan, short-term financial planning open open every month or every quarter, but the investment target of non-standard special plan duration are more than a year. (2) lack of reasonable valuations. (3) lack of full disclosure of information.

Irregularities in the pool against the asset management business nature, easy to form investors to honour the expected rigidity, sliding into a ponzi scheme, the financial risk of latent period long, once the outbreak, will cause significant losses to investors, dangerous. Securities regulatory commission (CSRC) and the industry association is strictly forbidden in issuing pool, the securities investment fund industry banned for many times, the future will continue to be in line with the principle of substance over form to identify violations pool business, involving agencies strict processing, comprehensive clean-up pool of funds business, leave no dead Angle. Revised the "detailed rules" and banned in issuing pool, and on the basis of the original "detailed rules" has carried on the detailed description, which can be concluded that the China securities regulatory commission and the industry association's forbidden on pool business. In the process of fund management business, strictly abide by the relevant departments of supervision, put an end to carry out the pool business.

In 2014 China's asset management industry's actual size is about 42 trillion, 12 trillion more than the end of 2013. By the end of March 2015, the size of the information technology industry reached 65 trillion. By the end of 2015, the total size of the asset management industry reached 39.38024 trillion yuan, up 92.2% from a year earlier. Is the largest securities companies, information technology products accounted for nearly thirty percent; Followed by fund subsidiary only door products, the third is public funds. Look from the increment size, we have stood at the starting point of the era of large information. More importantly, the changes in the size, push China into the strong power of the era of large information in the next few years will be increased. Look from the increment size, we have stood at the starting point of the era of large information. More importantly, the changes in the size, push China into the strong power of the era of large information in the next few years will be increased. New rules of "eight bottom line" and "further detail the supervision business boundaries, to strengthen the information disclosure and risk disclosure requirements for investors, made clear to hire investment advisers and institutional asset management products of disclosure, the disclosure obligation equal products for sales promotion behavior, the branch for the risk of revealing, the information disclosure obligation, to ensure that the investor's right to know and product specification operation, is conducive to enhance investor confidence in the asset management products, as well as the administrator, enhance the credibility of the industry.