ahead of China’s banks, the country’s brokerage firms are to be
allowed to manage assets for individual clients for the first time,
according to proposals by the China Securities Regulatory
Commission.
The agency said that it is seeking public opinion on the proposals
that would allow domestic brokerages to provide private wealth
management services. Under the rules, brokerages would be allowed
to invest in stocks, bonds, commercial paper and derivatives on
behalf of their clients, the regulator said in a statement on its
website.
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It didn’t provide a timeframe for introducing the new rules or the
minimum amount clients would need to place with brokerages for such
investments. The deadline for submitting opinion on the proposals
is 15 February.
The move comes at a time of growing competition for China’s
personal wealth by domestic banks and foreign entrants. The country
has 320,000 US dollar millionaires, a Merrill Lynch/Capgemini
survey last year estimated.
Individual clients’ wealth management accounts must be separate and
reported to the securities regulator before any trading can be
conducted, according to the new rules. Brokerages are required to
provide an investment management report to clients every month on
asset allocation and change in net values.
Securities companies must not make promises of principal-guarantee
or of minimum investment returns to clients with clients bearing
all the investment risks, the regulator said. Brokerages should
also sign a contract with the client to specify the management fee,
commission on the profit and payment method.
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