China’s securities regulator tightens screws on big money market funds

Shanghai, China. Photo from Pixabay.

China‘s securities regulator published draft rules on Friday to strengthen supervision over major money market funds, a step that could further rein in Ant Group’s Yu’e Bao.

The draft rules will tighten scrutiny over money market funds with a large size or a great number of investors, to protect investors’ interest.

“Major” funds are defined by the rules as those with more than 200 billion yuan ($31.49 billion) in net assets, or with over 50 million investors.

Yu’e Bao, controlled by Ant Group, the payment affiliate of Alibaba Group Holding Ltd, is China‘s biggest money market fund with 764.6 billion in net assets by the end of September.

The new rules “will further strengthen fund managers’ risk-management ability, improve product resilience, and ensure safety and liquidity” of investments, the China Securities Regulatory Commission (CSRC) said in a statement. It did not name any companies.

China has imposed a sweeping restructuring on Ant, whose record $37 billion initial public offering was derailed by regulators in late 2020. In April last year, China‘s central bank urged Ant to reduce the size of Yu’e Bao.

Yu’e Bao, previously the world’s biggest money market fund, has already seen its asset under management (AUM) more than halve from its peak of 1.7 trillion yuan in early 2018.

According to Friday’s rules, major money market funds “must not expand blindly”, and their managers’ pay must not be linked to the fund size.

In addition, fund managers must set aside 40% of the management fees as risk reserves, and should put in place more stringent risk control measures, and increase the frequency of stress tests.

Yu’e Bao, integrated with Ant’s ubiquitous Alipay, is managed by Tianhong Asset Management Co Ltd, which is controlled by Ant.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.