Measures for the Supervision and Administration of Wealth Management Business of Commercial Banks
Measures for the Supervision and Administration of Wealth Management Business of Commercial Banks
Measures for the Supervision and Administration of Wealth Management Business of Commercial Banks
Order of the China Banking and Insurance Regulatory Commission [2018] No.6
September 26, 2018
The Measures for the Supervision and Administration of Wealth Management Business of Commercial Banks, adopted at the third chairman's meeting of the China Banking and Insurance Regulatory Commission in 2018, are hereby promulgated and shall take effect immediately from the date of promulgation.
Chairman Guo Shuqing
Measures for the Supervision and Administration of Wealth Management Business of Commercial Banks
Chapter I General Provisions
Chapter II Classified Administration
Chapter III Business Rules and Risk Management
Chapter IV Supervision and Administration
Chapter V Legal Liability
Chapter VI Supplementary Provisions
Chapter I General Provisions
Article 1 To strengthen the supervision and administration of wealth management business of commercial banks, promote the regulated and healthy development of wealth management business of commercial banks, and safeguard the lawful rights and interests of investors according to the law, these Measures are formulated in accordance with such laws and administrative regulations as the Banking Regulation Law of the People's Republic of China and the Law of the People's Republic of China on Commercial Banks, and the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions (hereinafter referred to as the "Guiding Opinions").
Article 2 Commercial banks, including Chinese-funded commercial banks, wholly foreign-funded banks and Sino-foreign joint venture banks, established within the territory of the People's Republic of China shall be governed by these Measures.
Article 3 For the purpose of these Measures, wealth management business refers to financial services where commercial banks are commissioned by investors to invest and manage the commissioned property of investors in accordance with investment strategies, risk tolerance and ways of profit distribution as agreed with investors in advance.
For the purpose of these Measures, wealth management products refer to non-principal-protected wealth management products where commercial banks distribute returns to investors depending on the agreed conditions and actual returns on investment but do not guarantee the repayment of the principal and the amount of returns.
Article 4 The property under wealth management products of a commercial bank shall be independent of the self-owned property of managers and custody institutions, and any property derived from managing, utilizing, or disposing of the property under wealth management products or from other situations shall be all counted as the property under wealth management products of the bank.
Neither the manager nor the custody institution for wealth management products of a commercial bank may include any property under wealth management products of the bank in its own property; where the manager or the custody institution is liquidated as it is dissolved or canceled or declares its bankruptcy according to the law, the property under wealth management products of this bank shall not be counted as liquidation property.
Article 5 The creditors' rights created as a result of the management, utilization and disposal of the property under wealth management products by the manager for the wealth management products of a commercial bank shall not be used to offset the debts formed in association with the manager's or the custody institution's self-owned property; the creditors' rights and debts created as a result of the management, utilization and disposal of the property under different wealth management products by the manager shall not be used to offset each other.
Article 6 When carrying out wealth management business, commercial banks shall perform duties of managing money matters on behalf of others as entrusted in an honest, faithful, diligent and responsible manner, in accordance with relevant provisions of Article 8 of the Guiding Opinions, and investors shall bear investment risks on their own and receive returns.
When carrying out wealth management business, commercial banks shall follow the principles of making costs measurable, risks controllable and information adequately disclosed, and protect the lawful rights and interests of investors in strict accordance with the requirements on investor suitability management.
Article 7 Banking regulators shall supervise and administer wealth management business activities of commercial banks in accordance with the law.
Banking regulators shall subject wealth management business to penetrative supervision, and identify the ultimate investors and the underlying assets of wealth management products, and carry out all-round dynamic supervision of the operation and management of wealth management products.
Chapter II Classified Administration
Article 8 Commercial banks shall classify wealth management products into publicly offered wealth management products and privately offered wealth management products, depending on the different ways in which funds are raised.
For the purpose of these Measures, publicly offered wealth management products refer to wealth management products publicly offered by commercial banks to non-specific targets. The standards to determine the public offering shall be subject to the Securities Law of the People's Republic of China.
For the purpose of these Measures, privately offered wealth management products refer to wealth management products not publicly offered by commercial banks merely to qualified investors. A qualified investor refers to a natural person, a legal person or a legally established organization of another kind that has the necessary capacity to identify and tolerate risks, invests at least a certain amount in a single wealth management product and satisfies the following criteria,
1. An individual that has investment experience of more than two years, with his or her family's net financial assets not less than CNY3 million, or his or her family's financial assets not less than CNY5 million, or his or her annual average income in the past three years not less than CNY400,000;
2. A legal person or an organization of another kind that owns net assets of no less than CNY10 million at the end of the previous year;
3. Other circumstances specified by the banking regulator of the State Council.
The investment scope for privately offered wealth management products shall be agreed upon in contracts, and may cover debt assets, equity assets, etc. Equity assets refer to stocks listed and traded, and equities of non-listed enterprises as well as the right to benefits (returns).
Article 9 Commercial banks shall, depending on the different nature of investment, classify wealth management products into wealth management products featuring fixed income, wealth management products of the equity type, and wealth management products targeting commodities and financial derivatives, and hybrid wealth management products. At least 80% of funds raised through wealth management products featuring fixed income are invested in deposits, bonds or other debt assets; at least 80% of funds raised through wealth management products of the equity type are invested in equity assets; at least 80% of funds raised through wealth management products targeting commodities and financial derivatives are invested in commodities and financial derivatives; the respective proportion of funds raised through hybrid wealth management products to invest in debt assets, equity assets, and commodity and financial derivative assets does not reach the threshold of the aforesaid three types of wealth management products.
Where the aforesaid limit on the percentage is exceeded not because of subjective factors of commercial banks, they shall adjust the investment proportion of the wealth management product to meet relevant requirements, within 15 trading days of the date on which liquidity-restricted assets can be sold or transferred or the trading thereof is resumed, except special circumstances specified by the banking regulator of the State Council.
Article 10 Commercial banks shall classify wealth management products into closed-end ones and open-end ones.
For the purpose of these Measures, closed-end wealth management products refer to wealth management products: (1) which will become mature at the designated date; (2) which investors cannot subscribe or redeem during the period from the date such products are created to the date they become mature. For the purpose of these Measures, open-end wealth management products refer to wealth management products: (1) the total units of which are not fixed from the date such products are created to the date they become mature; and (2) which investors may subscribe or redeem on the trading days at the corresponding place, as stipulated in the product agreements.
Article 11 To offer wealth management products which are used to invest in derivative products, commercial banks shall be qualified to trade derivative products, and abide by the relevant provisions of the banking regulator of the State Council in respect of the business management of derivative products.
Where the wealth management business carried out by commercial banks involves foreign exchange business, they shall have the qualification for relevant foreign exchange business, and abide by provisions concerning the administration of foreign exchange.
Article 12 The headquarters of a commercial bank shall, as per the following requirements, register its wealth management products in a centralized manner in the National Banking Wealth Management Information Registration System,
1. For a commercial bank that publicly offers wealth management products, its headquarters shall carry out the registration in the National Banking Wealth Management Information Registration System ten days prior to the sale of wealth management products;
2. For a commercial bank that privately offers wealth management products, its headquarters shall carry out the registration in the National Banking Wealth Management Information Registration System two days prior to the sale of wealth management products;
3. The headquarters shall, pursuant to applicable provisions, constantly register relevant information about wealth management products, including the fundraising, subscription, redemption, investor information, invested assets, breakdown of transactions in assets, valuation of assets, and liabilities, when wealth management products are offered to raise funds and have not matured yet;
4. The headquarters shall register the termination within five days from the termination of wealth management products.
A commercial bank shall ensure the truthfulness, accuracy, completeness and timeliness of registration information about its wealth management products. Where the information registered is incomplete or fails to meet the relevant requirements, the commercial bank shall provide additional information or re-handle the registration.
No commercial bank shall offer a wealth management product which has not been registered in the National Banking Wealth Management Information Registration System for a registration code and assigned a registration code. The commercial bank shall explicitly indicate the registration code issued by the National Banking Wealth Management Information Registration System for a wealth management product in a prominent position of the sale materials for such product, and remind investors that they may use such registration code to inspect information about such product on the website at Chinawealth.com.cn.
The Banking Wealth Management Registration and Custody Center shall perform the following duties, under the guidance of the banking regulator of the State Council,
1. Constantly strengthen the development and management of the National Banking Wealth Management Information Registration System, and ensure the independence, security and efficient operation of the system;
2. Make improvements to the business rules, operating procedures and technical specifications on the registration of information on wealth management, and better monitor the quality of the registration of information on wealth management;
3. Report on the wealth management business, the quality of registered information on wealth management, and the operation of the system to the banking regulator of the State Council;
4. Provide necessary technical support, business training, investor education, and other relevant services; and
5. Use information in compliance with laws and regulations, establish a non-disclosure system and take corresponding measures to maintain confidentiality, to ensure information security.
6. Other duties specified by the banking regulator of the State Council.
Chapter III Business Rules and Risk Management
Section I Management System and Management Rules
Article 13 The board of directors and senior management team of a commercial bank shall have a full understanding of wealth management business and all risks such business faces, work out the general strategies and policies for wealth management business in consideration of its own business objectives, investment management capacity, risk management level and other relevant factors, and have in place relevant human and material resources, including professionals, business processing systems, financial accounting systems and management information systems, which are necessary for the wealth management business and risk management.
Article 14 A commercial bank shall carry out wealth management business through a subsidy with independent legal personality. Where conditions do not permit for the time being, the headquarters of the commercial bank shall set up a specialized department for wealth management business, and carry out and manage wealth management business in a collective and centralized manner.
Regulatory provisions on the establishment of wealth management subsidies by commercial banks will be formulated by the banking regulator of the State Council separately.
Article 15 A commercial bank that carries out wealth management business shall ensure that wealth management business is separated from other business, wealth management products are separated from financial products that it sells on a commissioned basis, wealth management products are separated from each other, and operations for wealth management business are separated from those for other business.
Article 16 A commercial bank shall, depending on the nature of wealth management business and risk characteristics, establish and improve management systems for wealth management business, including product access management, risk management and internal control, personnel management, sales management, investment management, management of cooperative agencies, product custody, product valuation, financial accounting and information disclosure.
The commercial bank shall formulate and implement corresponding policies and procedures for risk management, targeting the risk characteristics of wealth management business, to ensure the continual and effective identification, measurement, monitoring and control of various risks concerning wealth management business, and incorporate risk management for wealth management business into its comprehensive risk management system.
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