China's National Financial Regulatory Administration has unveiled the "Interim Measures for Supervision and Administration of Local Asset Management Companies," effective immediately. This landmark regulation strengthens oversight of regional bad-debt managers to enhance industry standards and bolster regional financial stability.
Comprising 45 provisions across four chapters, the framework establishes crucial operational boundaries. It mandates local AMCs to focus on core responsibilities including non-performing asset acquisitions, debt recovery, and asset disposals while imposing clear prohibitions. Companies are barred from: - Offering principal guarantees or fixed-income promises - Requiring repurchase obligations from transferors - Facilitating fake off-balance-sheet transactions to conceal bad assets - Creating hidden local government debts through financing platforms
Risk management provisions introduce stringent quantitative controls: - Single-client exposure capped at 10% of net assets - Group client exposure limited to 15% of net assets - Qualified liquid assets must cover 30-day net cash outflows - Related-party claims cannot exceed 50% of net assets - External financing restricted to 3x net asset value
Regulatory responsibilities are explicitly divided, with provincial authorities bearing primary oversight duties while the national regulator coordinates information sharing and policy alignment. This regulatory architecture implements key directives from the Central Financial Work Conference, aiming to: - Fortify supervision mechanisms - Elevate risk management standards - Enhance sustainable development foundations - Optimize regional financial risk resolution capabilities
The administration will collaborate with local regulators to ensure smooth implementation, empowering local AMCs to leverage their unique advantages in mitigating regional financial and real-economy risks.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.