CSRC to allow brokerages to offer private funds

Privately-raised funds include "sunshine funds" that raise private capital to invest in public securities, private equity and venture capital funds.

The guidelines - which aim to turn Chinese brokerages into modernized investment banks - come after the State Council issued guidance for capital markets reform early this month. The blueprint covers nine directives that include promoting the private equity industry.

Securities firms are encouraged to expand into online financial services and create an industry-wide payment system to offer financial products, including over-the-counter derivatives, commodities and privately-offered funds.

They are also encouraged to launch their own private equity products, including buyout funds, mezzanine funds and sector-focused funds, the regulator said.

The CSRC didn't elaborate as to whether securities firms could distribute private funds managed by third parties.

In response to the new measures, several leading brokerages are planning to jointly establish a company, called Zhenglian or Union Securities, to facilitate the settlement and clearance of privately-offered funds, bonds and other financial products, according to Caixin.

"However, distribution is a very small portion of their [securities firms] income," said Howhow Zhang, research director at advisory firm Z-Ben. "Most securities firms rely on private banks to raise money for their own products."

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• Topics
• Greater China
• Regulation
• China
• regulation
• CSRC