The Asset Management Association of China (Amac) has expanded its membership to include private equity firms, insurance companies and securities houses to fit in with pending new regulations.
The announcement comes shortly after the China Securities Regulatory Commission (CSRC) moved at the end of last month to allow such domestic organisations to start mutual fund businesses. To do so they must first become members of Amac.
The CSRC proposals are open for consultation and are expected to be implemented alongside the new investment fund law, which is due to come into effect this June.
Amac, set up last June to oversee and improve standards in China’s mutual fund industry, announced a batch of 25 special memberships to institutions including private sunshine funds, domestic insurance companies and foreign asset managers.
On the list were PICC Asset Management, the AM arm of the People’s Insurance Company; Ping An Russell Investment Management; Fidelity (Hong Kong); HSBC (China); UBS Global Asset Management (Singapore and China); and sunshine funds such as Chongyang and Greenwoods Asset Management and StarRock Investment Management.
Amac’s membership now stands at 72 fund managers, 18 custodian banks, 46 fund distributors and 10 fund rating agencies, according to its website.
AsianInvestor picked Amac chairman Sun Jie, the former director of investment fund supervision at CSRC, as one of its top 10 people moves of 2012.
The Amac guidelines state that a domestic institution providing asset management services to third parties must have no less than Rmb10 million in registered capital and AUM of at least Rmb100 million in the past year.
To become a member, the firm must not have been punished by regulators or administrative authorities over the past year and its key-person-in-charge should have a sound record and at least three years’ investment management experience.
Foreign asset management institutions with QFII status, AUM of at least $500 million and a good record are also eligible to apply for special membership.
Under CSRC rules, to start a fund management business companies need good corporate governance and internal risk controls, a good track record with three consecutive years of profit and not have breached regulations in the past three years.
The minimum AUM for securities firms and insurance companies is Rmb20 billion. The former are required to have a minimum net capital of Rmb1 billion in the latest quarter, while insurers must have met solvency margin ratio requirements over the past 12 months.
Private equity organisations should have a minimum AUM of Rmb3 billion over the past three years and no less than Rmb10 million in capital receipt.
A CSRC official told Chinese media that about 16 securities firms and 14 insurance companies currently meet these requirements.