China published rules allowing brokerages and insurers to sell mutual funds to the public as regulators seek to increase the role of institutional investors in the country’s capital markets.
The rules also allow companies that previously only managed money raised privately to offer mutual funds, the China Securities Regulatory Commission said in a statement on its website yesterday. Eligible firms may submit applications starting in June, the regulator said.
CSRC Chairman Guo Shuqing, since taking office in October 2011, has sought to bolster the role of institutional investors, which the regulator says account for about 14 percent of China’s stock market compared with 50 percent to 60 percent in developed countries. The new rules are an important step toward building an “open, inclusive, and diverse wealth management industry,” the CSRC said.
The regulations released yesterday lower the entry threshold for private fund mangers entering the mutual fund business as compared with a December draft version of the rules. Private equity and venture capital firms were also added as eligible participants after the regulator took feedback on the earlier version of the rules, the CSRC said.
Managers of private funds need to have an average of at least 2 billion yuan ($320 million) in assets under management in the past three years, the rules say. The requirement had been 3 billion yuan in the earlier draft version of the rules.
Insurance companies and securities firms need to have at least 20 billion yuan in assets under management to be eligible, according to the rules.
China last year also increased quotas for foreign institutions and lifted the investment ceiling on overseas central banks to encourage long-term investors.