The gray area, as the name suggests, means that everyone may have a clear understanding of right and wrong, either right or wrong, white or black. In fact, there is a large gray area between these two extremes, which is ambiguous and difficult to define. But let’s say it’s the buffer zone and transition zone between black and white.

The "grey area" in practice

1. After the ban on inferior investment, how to identify the investment mezzanine

The new credit insurance regulations clearly include the beneficiary rights of the inferior investment class Supervision red line, but how to determine the effectiveness of investment mezzanine (intermediate level) in the future is still controversial in practice.

One view is that intermediate-level beneficiary rights are inferior to priority-level beneficiary rights in order, and should be included in the red line as "inferior-level beneficiary rights."

Another view is that "intermediate level" and "inferior level" are two independent concepts, and the "New Asset Management Regulations" should be applied mutatis mutandis, which stipulates that "graded private equity products should be based on the assets invested. "Set the grading ratio according to the risk level (priority share/inferior share, intermediate share included in the priority share)" and the China Securities Regulatory Commission's "Interim Provisions on the Operation and Management of Private Equity Asset Management Business of Securities and Futures Institutions" (China Securities Regulatory Commission) Commission Announcement [2016] No. 13) stipulates that “if there is an intermediate share in a structured asset management plan, it shall be included in the priority share when calculating the leverage multiple.”

The new credit insurance regulations do not explicitly prohibit insurance capital from investing in intermediate-level beneficiary rights, and the regulatory authorities have not stipulated "mezzanine" or "intermediate-level" shares.

Therefore, the identification of mezzanine has still not been resolved in the new credit insurance regulations. In other words, can we understand that when the inferior proportion of specific trust products has clearly met the capital matching requirements? Under the premise, is there still room for survival of the mezzanine structure of insurance capital investment?

2. Set thresholds and how to judge “major penalties”

The new credit insurance regulations do not clearly define what “major administrative penalties by regulatory agencies” are. We compared the relevant provisions of the "Administrative Punishment Measures of the China Banking Regulatory Commission" issued by the original China Banking Regulatory Commission in 2007 and 2015.