China’s MMF rules could reduce systemic risk: Fitch

Fitch ratings buildingThe new rules for major money market funds (MMFs) in China could have the effect of encouraging more diversification and reducing systemic risk, according to credit rating company Fitch. The China Securities Regulatory Commission (CSRC) issued new draft regulations last week designed to rein in some of the country’s largest funds. The proposed rules impose a number of restrictions in terms of leverage, single issuer and investor concentration and minimum holding levels for certain liquid assets. They also require MMFs and their custodians to set aside more capital as a risk reserve. While Fitch states that the rules would lower the credit risk of the affected MMFs, they may also diminish yields and lead to capital outflows. “Fitch believes the cost of these risk reserves could lead fund providers to cap fund sizes and/or investor numbers, potentially leading to new fund launches to accommodate incremental demand,” states the rating agency. “Furthermore, Fitch expects both fund providers and custodians will be incentivised to diversify fund distribution channels for all their MMFs under management.” ©2022 funds global asia

Executive Interviews

Executive interview: PGIM CEO on where the ESG flowers should bloom

Sep 27, 2021

David Hunt, president and chief executive of PGIM, tells Romil Patel about leading a top 10 global asset manager in times where “empowering and encouraging the kind of investment decisions as...

Executive interview: Nicolas Moreau’s orderly transition

Jul 12, 2021

Nicolas Moreau, CEO of HSBC Asset Management, is moving to Asia as the firm looks to connect more directly with the region’s growth story. ESG is also a key focus – including the ‘just’ carbon...


Roundtable: Singapore comes of age as an Asian ESG hub

Dec 01, 2021

Strong ESG credentials strengthen the case for Singapore as a leader in Asia of the post-Covid recovery. Our panel discusses the risks and opportunities.

Roundtable: How well geared are Japanese assets for a new world?

Jul 12, 2021

As we prepare to emerge from Covid, experts look at overcoming demographic issues through a combination of good tech and corporate governance, improving productivity and meeting an ambitious government carbon emissions reduction target. Chaired by Romil Patel.