|
The China Securities Regulatory Commission (CSRC), China's securities watchdog, issued two new rules Wednesday to regulate sales and operation of securities investment funds.
The rules, effective from today, are aimed at boosting the healthy growth of the securities investment fund industry and curbing irregularities in the business.
With detailed requirements for the qualification of fund managers, custodians and sales agents and strict discipline for fund marketing and investment activities, the two rules are also an important supplement to the newly enacted Securities Investment Fund Law of China, which took effect on June 1 and is widely regarded as a crucial first step to build a comprehensive legal framework in the sector.
CSRC has released some parallel regulations to ensure implementation of the fund law.
The two new rules would clarify more details and make the regulatory system more efficient, analysts said.
In the regulation on the marketing and sales of the securities investment funds, it is designated that fund management companies and their sales agents should ensure the truthfulness of the content of the promotional documents to the public.
They must not make untrue commitments of the returns of the fund, badmouth other competitors or exaggerate the safeness of securities investment.
"Investors should be warned of potential investment risks," the regulation said.
"The past performance of the fund manager does not guarantee the performance of the new fund."
Meanwhile, fund managers and their fund sales agents are prohibited to make malicious competition via lowering fees to abnormal standards or offering commission or gifts.
Those breaking the rules will have their misbehaviour recorded, be fined or suffer some other administrative punishment or even have their licenses cancelled.
Regarding the daily operation of the securities investment fund, the other CSRC regulation requested fund managers and custodians to have sound internal control and risk management.
Before setting up a fund, the fund management company should first clarity the investment direction of the fund and make sure the products comply with existing rules.
China's mutual fund business has entered a period of fast expansion since the end of last year. The bullish stock market in the first four months of this year saw more than 90 billion fund units sold in a flood of mutual fund offerings and the emergence of more new fund products like the monetary market and guarantee funds.
Though the stock market is now in a correction, fund managers still keep up a fast pace of new product issues, though that also arouses regulators' concern about risk control.
"Innovation is a major driving force for fund managers," said Shang Jian, general manager of Yinhua Fund Management.
(China Daily July 1, 2004)
|
