MMF Reform Coming to China?
Asia Asset Management published a story, "China looks to tighten screws on MMFs." It says, "The China Securities Regulatory Commission (CSRC) is looking to further regularise the country's booming money market fund (MMF) sector by proposing greater risk control, liquidity and information disclosure measures, among other factors. The initiative comes as the country's MMF market has seen its total AUM explode from around 304 billion RMB (US$48.64 billion) in mid-2013 to 2.5 trillion RMB as of the end of April 2015. That upward trajectory coincided with Chinese e-commerce giant Alibaba Group pairing up with Tianhong Asset Management (Tianhong AM) to launch the online platform Yu'e Bao in 2013. In June of that year, Yu'e Bao launched its first online MMF, the Tianhong Zenglibao Monetary Fund. The product has helped the firm to increase its total AUM to around 580 billion RMB as of May 2015. Given the sector's momentum, the CSRC has proposed measures to prevent the market from derailing, outlining a number of new controls and regulations. These include broadening the funds' investment scope, strengthening risk control and liquidity management systems, and tightening information disclosure, stress testing, and supervisory requirements. Public consultation on the new rules is being carried out until June 14. Dai Hongkun, chief analyst at Shanghai Securities, told Asia Asset Management that the CSRC is aware of potential liquidity and credit risks relating to MMFs, despite recent high levels of growth. The proposed guidelines will help to mitigate the risk of systemic collapse in the event of large-scale redemptions, he believes. "China's MMF industry landscape remains highly centralised going forward and will continuously be dominated by a few of the largest players such as Tianhong and China Universal Asset Management. The economies of scale of their business means they can stave off competition from newcomers," he added. Asian Investor also carried the news in the article, "Securities Watchdog to Overhaul China MMF Rules." In other news, U.K.-based Standard Life Investments announced that it has renamed the Ignis Liquidity Funds, which it purchased it in March 2014, as the Standard Life Investments Liquidity Funds.
