CBIRC Promulgated the Interim Administrative Measures for Insurance Asset Management Products

On March 25, 2020, CBIRC published the Interim Administrative Measures for Insurance Asset Management Products.

On March 25, 2020, CBIRC published the Interim Administrative Measures for Insurance Asset Management Products.

The Interim Measures are to implement the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions, which were issued jointly by the People’s Bank of China, CBIRC, China Securities Regulatory Commission and State Administration of Foreign Exchange in April 2018 and to reconcile the regulatory rules for insurance asset management with those for the asset management business of banks, private fund asset management institutions and other financial institutions.

Asset management principles

The Interim Measures prohibit insurance asset management institutions from guaranteeing fixed returns and apply the “look-through” approach to regulate the insurance asset management business, including look-through up to the ultimate investors and down to the underlying assets.

Qualified investors

The Interim Measures expressly allow individuals to be qualified to purchase insurance asset management products, and further clarify that qualified investors can include institutions supervised by financial regulatory authorities, asset management products offered by such institutions, basic pensions, social security funds, enterprise annuities and other pension funds.

Investment advisors

The Interim Measures provide that insurance asset management institutions may engage investment advisors that possess relevant professional qualifications and are supervised by financial regulatory authorities. Investment advisors are prohibited from directly making investment decisions or directly executing investment orders or guaranteeing fixed returns.

Sales agencies

The Interim Measures expand the scope of sales agencies and provide for the first time that financial institutions and such other institutions as approved by CBIRC can sell insurance asset management products on a commission basis.

Issuance and operation of products

The Interim Measures make it clear for the first time that insurance asset management products can only be offered in a non-public manner. The Interim Measures divide insurance asset management products into four categories in accordance with the Guiding Opinions: fixed income products, equity products, commodity and financial derivative products, and mixed products, and set forth certain ratio limitations on investments in each of the categories. Insurance asset management institutions should register their insurance asset management products with the relevant institutions recognized by CBIRC and perform certain on-going reporting obligations during the lives of such products.

Prohibited activities

The Interim Measures expressly prohibit insurance asset management institutions from providing channel services. The Interim Measures also prohibit multi-tier nesting, unless otherwise provided by laws, administration regulations, and financial regulatory authorities.

Information disclosure and internal control

The Interim Measures provide that insurance asset management institutions should disclose the net value and other significant information to investors at least on a quarterly basis. Insurance asset management institutions should establish rules and systems for risk responsible person and risk reserves, and enhance internal and external audit supervision and standardize affiliated transactions.

Disclaimer: This is an article created by Michael Liang for Chinasdg.org. You can find the original article here: https://chinasdg.org/2020/07/09/cbirc-promulgated-the-interim-administrative-measures-for-insurance-asset-management-products/.

Leave a Reply

Please Login to Comment