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Draft guidelines to curb risky practices in China's private funds

China's Asset Management Association (Amac) has proposed rules to manage risk within the country's USD2.9tr private fund sector. These guidelines are expected to limit the risk posed by private securities funds (PSFs) that invest in bonds and listed stocks. Amac's proposed restrictions aim to ensure fund managers diversify portfolios to mitigate risk and prevent illegal conduct such as involvement in structured bond issuances or risky investment strategies. Critics argue the proposed rules may interfere too much in the operation of the funds, potentially impeding investment strategies. Nevertheless, the draft guidelines are being lauded by some as necessary to prevent illegal and overly risky activities within the largely unregulated PSF sector.


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