China: Alfi, Amac ink agreement
The Association of the Luxembourg Fund Industry (Alfi) and the Asset Management Association of China (Amac) have signed a memorandum of understanding on increasing cooperation.
The agreement, concluded on June 30 in Beijing, covers jointly run programmes, such as meetings, visits and seminars, mutual assistance, the exchange of information relating to regulations and investor protection, and professional development events for members.
Alfi said it hopes the exercise would build trust and encourage Chinese fund houses expanding abroad to consider domiciling in Luxembourg. Amac said it hopes the collaboration would help China further professionalise its funds industry.
The Alfi deal comes on the heels of a similar MoU signed by Amac and the Alternative Investment Management Association the week before, the first to struck between a foreign association and the Chinese body.
International: BIS warns over fund industry risks
Recent asset management industry growth poses challenges for the financial system as well as opportunities, the Bank for International Settlements has warned.
In its 84th annual report published at the end of last month, BIS, know as the bank of central banks, said the growth of asset management has helped fund the real economy and provided an alternative to reliance on bank credit.
However, the fund industry could “exacerbate the pro-cyclicality of asset prices, feeding the market’s momentum in booms and leading to abrupt withdrawals from asset classes in times of stress” because portfolio managers are evaluated on short-term performance, and revenues are linked to fluctuations in customer fund flows.
BIS noted that the world’s largest 500 asset managers managed more than $60 trillion of assets as of 2012, double the level in 2002.
It also pointed out that the biggest fund houses are increasing their market share, with the top 20 firms managing some 30% of the industry’s global AUM as of 2012, up from just over 10% in 2002.
China: Regulator clamps down on insider trading
China’s securities regulator has referred five fund managers from Shanghai-based fund house HFT Investment Management to the police over allegations of insider trading, it said on Friday.
The traders in question are Jiang Zheng, Sheng Chen-shao, Mu Yong-ning, Cheng Dong and Huang Chun-yu.
The China Securities Regulatory Commission said it was cracking down on illegal trading activities.
“All fund houses need to strengthen professional ethics education and establish risk management systems,” it added. “Fund managers need to better understand the responsibility to the fund’s assets and its shareholders. A fund house’s reputation’s depends on adhering to a legal and moral line.”
In April, Ma Le, a former fund manager at Shenzhen-based Bosera Asset Management was sentenced to three years in prison in what the Shenzhen Daily reported to be the largest insider trading case in China.
During his time as a fund manager, Ma had made nearly Rmb19 million ($3 million) through illegally trading more than 70 stocks, it was reported.
Hong Kong: New framework for private bankers
The Hong Kong Monetary Authority (HKMA) launched an enhanced competency framework (ECF) for private bankers on June 24.
The non-statutory framework is intended for client-facing private bankers and covers product knowledge, ethics and compliance, among other topics. A self-study, accredited training programme and examination are available as part of the scheme.
While the banking regulator intends to use the initiative to assess the competency of bank staff, the scheme is also part of a wider initiative to help build Hong Kong’s brand as a premier international financial centre providing high-quality services, said Arthur Yuen, HKMA deputy chief executive.
The regulator collaborated with the Private Wealth Management Association, Hong Kong Institute of Bankers, Hong Kong Securities and Investment Institute, and Treasury Markets Association to produce the programme.
China: Shanghai FTZ opens up further
The Shanghai Municipal People’s Government issued a revised ‘negative list’ on July 1, opening up further industries to foreign investment in the Shanghai free trade zone (FTZ). The new rules cut the number of industries restricted from foreign investors from 190 to 139, including manufacturing, property and maritime services. They also loosen restrictions on qualification requirements and maximum equity ratios for non-Chinese partners.
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