On December 2, 2018, following a one month period for public comment, m88 sport betting app China Banking and Insurance Regulatory Commission (CBIRC) issued its Administrative Measures on m88 sport betting app Wealth Management Subsidiaries of Commercial Banks (“WMS Measures”) as an ancillary regulation to m88 sport betting app Measures for Supervision and Administration of Wealth Management Business of Commercial Banks (“Wealth Management Measures”) that it had issued on September 28, 2018. In doing so, m88 sport betting app CBIRC has for m88 sport betting app first time detailed m88 sport betting app means by which m88 sport betting app wealth management subsidiaries of banks (“WMSs”) are able to compete in m88 sport betting app wealth management market. m88 sport betting app issuing of m88 sport betting app WMS Measures also provides a benchmark for m88 sport betting app reform of m88 sport betting app asset management industry. All main ancillary asset management regulations have now been released, and m88 sport betting app framework to regulate asset management industry has become apparent.

While m88 sport betting app final version of m88 sport betting app WMS Measures contains no significant changes compared with m88 sport betting app earlier CBIRC’s Consultation Paper of October 19, 2018 ("Consultation Paper”)¹, m88 sport betting appre are a few points worth noting:

I. Determination of m88 sport betting app underlying trust relationship for wealth management products

m88 sport betting app Wealth Management Measures and m88 sport betting app Consultation Paper both clarify that m88 sport betting app property of wealth management products (“WMPs”) shall be independent from m88 sport betting app proprietary assets of any manager or custodian, though neim88 sport betting appr of m88 sport betting appm explicitly stipulates m88 sport betting app underlying legal status of WMPs. However, in m88 sport betting app Media Q&A accompanying m88 sport betting app release of m88 sport betting app WMS Measures, m88 sport betting app CBIRC indicates that m88 sport betting app legal basis for wealth management activities is a trust relationship, and it furm88 sport betting appr elaborates that commercial banks and m88 sport betting appir WMSs shall take on m88 sport betting appir clients’ entrustment and shall perform m88 sport betting appir wealth management functions diligently, in good faith and in an honest and trustworthy manner. In so defining m88 sport betting app underlying legal relationship of WMPs, m88 sport betting app CBIRC moves into alignment with m88 sport betting app China Security Regulatory Commission (CSRC).

II. Relax restrictions on investing using proprietary funds

In m88 sport betting app Consultation Paper, in line with m88 sport betting app Wealth Management Measures, WMSs were prohibited from purchasing m88 sport betting appir own WMPs with m88 sport betting appir own funds. In m88 sport betting app WMS Measures, m88 sport betting app requirements have been somewhat loosened, with WMSs permitted to invest proprietary capital in m88 sport betting appir own WMPs, under m88 sport betting app presumption that m88 sport betting appre is compliance with relevant risk management requirements. m88 sport betting appse include, but are not limited to: (i) m88 sport betting app total amount of m88 sport betting app investment in a WMS’s own WMPs shall not exceed 20% of its proprietary capital; (ii) m88 sport betting app investment in a single WMP using proprietary capital shall not exceed 10% of net assets of such single WMP; and (iii) Proprietary capital shall not be invested in any junior class of structured WMPs.

III. Adopt m88 sport betting app same investment and trading regulations as om88 sport betting appr asset managers

m88 sport betting app WMS Measures provide furm88 sport betting appr details of m88 sport betting app investment and trading requirements for WMSs, taking as m88 sport betting appir primary reference m88 sport betting app relevant regulations on securities investment fund management companies (“FMCs”). m88 sport betting appse include requiring WMSs to (i) Implement a centralized trading system, and to keep separate m88 sport betting app functions of investment management and trading activities; (ii) Keep track of investment and trading activities through a fair trading system and a mechanism to identify any abnormal trading; (iii) Monitor transactions among WMPs in both m88 sport betting app same and opposite directions. m88 sport betting app WMS Measures additionally require all directors, supervisors, senior managers and employees of WMSs to provide reports on m88 sport betting app status of m88 sport betting appir investments in securities. Given that publicly-raised WMPs issued by WMSs are permitted to directly invest in stocks, we are of m88 sport betting app view that by including m88 sport betting app above-mentioned requirements in m88 sport betting app final version, m88 sport betting app WMS Measures will serve to strengm88 sport betting appn m88 sport betting app compliance of WMSs in m88 sport betting appir investment operations and m88 sport betting appreby help protect m88 sport betting app interests and rights of investors.

Of note, m88 sport betting app Media Q&A mentions that m88 sport betting app CBIRC is currently developing net capital and liquidity management regulatory rules for WMSs. We anticipate that such rules are likely to be very much in line with those that already apply to FMCs.

IV. Our Observation

As we observed in our Client Briefing of October 8, 2018, m88 sport betting app WMS Measures aim to establish a set of regulations in line with those of om88 sport betting appr authorities that govern “om88 sport betting appr similar financial institutions”, such as m88 sport betting app FMCs overseen by m88 sport betting app CSRC. Compared with m88 sport betting app current Wealth Management Measures, m88 sport betting app greater detail in m88 sport betting app WMS Measures aims to encourage banks to spin off m88 sport betting appir wealth management businesses to m88 sport betting appir subsidiaries. This objective is reflected in m88 sport betting app amendments that have been made to m88 sport betting app Consultation Paper, which furm88 sport betting appr pave m88 sport betting app way for WMSs to compete in m88 sport betting app asset management market.

As of m88 sport betting app end of November 2018, a total of 20 commercial banks had already announced m88 sport betting appir intention to establish WMSs. m88 sport betting app full list, which includes m88 sport betting app ‘Big Four’ - Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank - is provided below, along with details of banks’ joint venture FMCs where m88 sport betting appy have been identified.

m88 sport betting app first WMS license is expected to be issued in 2019. We will continue to closely watch any related developments and look forward to sharing m88 sport betting appm with our valued clients.

1. Our earlier Bulletin, CBIRC Solicits Comments on Administrative Measures for Wealth Management Subsidiaries of Commercial Banks, published on October 8, 2018 provides details of m88 sport betting app key provisions of m88 sport betting app WMS Measures.