China Securities Regulatory Commission, Guiding Opinions on Hedging Strategy Funds

中国证券监督管理委员会关于避险策略基金的指导意见

May 23, 2017 | BY

Susan Mok

CSRC has tightened risk controls for hedge funds.

Clp Reference: 3700/17.01.24 Promulgated: 2017-01-24 Effective: 2017-01-24

Promulgated: January 24 2017

Effective: as of date of promulgation

Applicability: For the purposes of these Guiding Opinions, the term “hedging strategy fund” means a publicly offered securities investment fund that is operated with the use of certain investment hedging strategies, while also bringing in a relevant protective mechanism with the objective of avoiding to the extent possible fund unit holders incurring a loss arising in their investment principal by the expiration of the hedging strategy term (Article 1).

Main contents: The Opinions abolish the security mechanism for joint and several liability, improve the risk control requirements for hedging strategy funds, set an upper limit on the size of hedging strategy funds to prevent relevant risks and improve the requirements in respect of risk management by fund managers.

A hedging strategy fund's investment in robust assets may not be less than 80% of its net asset value (Article 8).

Related legislation: PRC Securities Investment Fund Law (Revised), PRC Contract Law, Measures for the Administration of the Operation of Publicly Offered Securities Investment Funds and Provisions on Issues Concerning the Implementation of the <Measures for the Regulation of Money Market Funds>, 2015

Repealed legislation: Guiding Opinions on principal-guaranteed Funds, 2010

clp reference:3700/17.01.24 promulgated:2017-01-24 effective:2017-01-24

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