Chinese regulators are considering stricter rules on how banks sell financial products, potentially cutting off a key distribution channel for large hedge funds, according to sources. The National Financial Regulatory Administration is seeking feedback from commercial banks on revisions that would ban “disguised” selling of private fund products, including hedge funds. Banks have long been major distributors of hedge funds, typically raising money through trust products. If enacted, the new regulations would add to challenges in the 5.2 trillion yuan hedge fund industry, already under pressure from higher asset thresholds and other upcoming restrictions. Regulators are increasing efforts to eliminate weaker investment firms after recent irregularities. Banks have historically sold a variety of financial products to earn fees, diversifying offerings for private banking clients.