Financial Regulation International
Capital pool model regulation under China’s asset management regulations
Yilin Hu
On 27 April 2018, the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities
Regulatory Commission and the State Administration of Foreign Exchange jointly issued guidance on Regulating the Asset Management
Business of Financial Institutions (No 106 [2018], hereafter “the New Regulations on Asset Management”). The document offers
important guidance for preventing systemic financial risks and comprehensively regulating the asset management business of
various financial institutions since the reform of China’s financial system. It has opened the era of unified supervision
of “big asset management”, that is, developing from separate supervision to mixed supervision. It is also a regulation that
responds to the problems and risks arising from asset management practice. Its core content bans the capital pool model, breaks
down the rigid payment strategy and changes the net value of the financial products. However, the new regulations have many
defects, and the implementation process is complex. As a result, the actual impact and regulatory effect remain subject to
market evaluation.