A call for comment on ‘Guiding opinions on standardising financial institutions’ asset management business’, issued jointly by People’s Bank of China, China Securities Regulatory Commission, China Banking Regulatory Commission and China Insurance Regulatory Commission, has been widely circulated within the asset management industry, reports Yicai. The proposed regulation targets the fragmented framework that enabled regulatory arbitrage across financial institutions overseen by different regulators.

According to the paper, the ‘Guiding opinions’, comprised of 30 articles, include provisions that aim to crack down on implicit guarantees and repackaging, put caps on leverage ratios and enhance requirements on capital and risk provision. Due to different regulatory standards devised by the three financial regulators, circumventing regulations through repackaging and channelling are prevalent, writes the paper, and the ‘Guiding opinions’ serve to unify the regulation over the asset management industry and keep financial institutions to their primary line of business.