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Monday April 18, 03:13
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China is making one more step to market economy
(by Roy Deng)
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China is going to shake its regulatory system for the banking, securities and insurance sectors by the expected launch of fund management companies by a few pilot commercial banks, the financial regulators announced earlier this month.
The three first-runners are the State-owned Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB) and Shanghai-based joint-stock lender, Bank of Communications.
In case the experiment gets success, more banks are expected to get opportunity to launch their own fund companies.
The move will crack the previous system when Chinese banks were prohibited from taking part in securities investments or insurance, focusing mainly on the traditional lending and deposit services.
But the whole procedure of the launch of fund management companies remains in Chinese style. According to a regulation, interested banks must first apply to the China Banking Regulatory Commission (CBRC) and report to People’s Bank of China. Then they must undergo an examination by the CSRC for the relevant fund management firm licences.
Still, a major banks’ concern is the risk control scheme. To minimize the risks, regulators have required that a bank can not hold control for funds issued by its own fund management company.
Meanwhile, the detailed rules provided by authorities are expected to clear out the whole obligations for relevant participants and relevant punishment for lawbreakers.
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