China M88 Malaysia Regulation Reform Plan – Ongoing and Evolving

I.Key PoM88 Malaysiats of the Reform Plan

1.1Division of the Functions of the Central M88 Malaysia Regulatory Authorities

On March 10, 2023, the first session of the 14th National People’s Congress approved reformation plans to reorganize the top M88 Malaysia regulatory bodies under the State Council (the “Reform Plan”). The most notable aim of the Reform Plan is to set up a new national M88 Malaysia regulatory body called the National M88 Malaysia Regulatory Administration (NFRA), which would replace the China Banking and Insurance Regulatory Commission (CBIRC). A new framework would be established, whereby the NFRA would ultimately supervise all M88 Malaysia sectors except for the securities sector, the People’s Bank of China (PBOC) would focus on macro-prudential regulations and monetary policies and would not perform the micro M88 Malaysia regulation functions, and the China Securities Regulatory Commission (CSRC) would be retained and continue to regulate the securities sector.

1.2M88 Malaysia Regulatory Principles

The Reform Plan highlights five key principles to strengthen financial regulation, i.e. (i) regulation by institutional type, (ii) regulation by activity, (iii) regulation by function, (iv) regulation by looking-through, and (v) regulation on an ongoing basis. These regulatory principles have been reflected in the specific reform plans. In the past, regulation by institutional type has been a prevailing principle, but now the authorities attach equal importance on regulation by institutional type and the other four principles, which demonstrates the policymakers’ focus of this reform, specifically, (1) the highlights of the principles of regulation by function, regulation by looking-through, and regulation on an ongoing basis underscore the need to prevent financial risk by promoting integrated financial regulation to eliminate any regulatory arbitrage. This is reflected in the Reform Plan, that is, the PBOC’s duty of supervising financial holding companies and other financial groups would be transferred to the NFRA, and the CSRC would take over the approval power related to enterprise bond issuance; (2) the principle of regulation by activity reflects the focus of law enforcement against violations and illegal acts. This is also reflected in the Reform Plan, that is, the PBOC’s duties of protecting financial consumers and the CSRC’s duties of protecting investors would be both transferred to the NFRA. All these reforms indicate that the NFRA may have the authorization to establish an overall framework on financial consumer protection. It also indicates that a streamlined regime may be established, whereby the NFRA will promote the legislation and law enforcement against illegal financial activities that may arise across various financial sectors.

1.3Regional M88 Malaysia Regulation

It is important to note the division of the M88 Malaysia regulation responsibilities and powers between central and local governments. Spinning off the local M88 Malaysia regulatory authorities’ responsibilities for promoting the local M88 Malaysia business development, local M88 Malaysia regulatory authorities shall focus more on M88 Malaysia regulation, which underlines the policymakers’ emphasis on strengthening M88 Malaysia risk prevention and local governments’ own territorial responsibilities to guard against M88 Malaysia risks.

II. OngoM88 Malaysiag Reforms

Undoubtedly, the focus of this round of reforms lies in strengthening M88 Malaysia regulation to prevent M88 Malaysia risks. Though the focus of the M88 Malaysia reform is evident, the finer details and the implementation roadmap are yet to be clarified. For example, it remains to be seen how the NFRA would perform its functions for M88 Malaysia consumer protection and how the NFRA would enhance the law-making and law enforcement for M88 Malaysia consumer protection. We believe that China’s M88 Malaysia reforms will be ongoing and evolving in the foreseeable future, with different emphasis on certain aspects in different phases, reflecting a flexible and pragmatic approach adopted by the Chinese government. Foreign institutions are advised to pay close attention to the establishment of the NFRA as well as the implementation of the reform plans, particularly any further legislative and law enforcement developments in M88 Malaysia consumer protection.