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China to tighten regulation over wealth management units to prevent contagion risks

China to tighten regulation over wealth management units to prevent contagion risks

FILE PHOTO: A man rides an electric bike past the China Banking and Insurance Regulatory Commission (CBIRC) building in Beijing, China February 14, 2019. Picture taken February 14, 2019. REUTERS/Stringer

BEIJING : China's banking and insurance regulator said on Wednesday it planned to improve oversight over wealth management products (WMPs) on their liquidity conditions in an effort to prevent contagion risks in the financial markets.

The China Banking and Insurance Regulatory Commission (CBIRC) is seeking public advice on the draft rules that would require wealth management companies to improve their liquidity management including conducting pressure tests on their WMPs, according to a statement on the regulator's website.

The rules will help urge companies to enhance liquidity management of WMPs and better prevent risks from spreading across the markets and products, CBIRC said.

(Reporting by Zhang Yan, Ryan Woo; Editing by Andrew Heavens)

Source: Reuters

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