(A) cut off the transition period of the old and new problems

In order to ensure a smooth transition, the Opinions fully consider the term and market size of existing asset management products and the term and scale of invested assets, and give consideration to the reasonable issuance of incremental asset management products, and propose to set the transition period according to the principle of cutting off the old and the new. The transition period is set from the date of publication of the Opinions to the end of 2020, which is one and a half years longer than the exposure draft, giving financial institutions more time for rectification and transformation. During the transition period, the issuance of new products by financial institutions shall comply with the provisions of the Opinions; In order to continue the unexpired assets invested in existing products and maintain the necessary liquidity and market stability, old products can be issued for docking, but they should be strictly controlled within the overall scale of existing products and compressed in an orderly manner to prevent cliff effect at the end of the transition period.

For what are old products and new products, based on the spirit of maintaining the necessary liquidity and market stability in the Opinions, we believe that it is not just the new and old products themselves, but must be understood through the new and old products. Old products refer to products issued in the same form as existing products in order to continue the unexpired assets invested in existing products (for example, banks have previously invested in long-term assets with short-term closed products), so old products can be expected income products; If the issued product is connected with new assets instead of the original unexpired assets, it should be recognized as a new product and must be a net worth product.

However, in view of the division between the old and the new in the transition period, the supervision has not been further clarified, and further supporting policies are needed to maintain market stability.

(B) the gradual demise of capital preservation and financial management

It is clear that asset management business is off-balance-sheet business of financial institutions, and financial institutions may not carry out off-balance-sheet domestic management business; Asset management products issued by banks, especially non-guaranteed bank wealth management products.

The Opinions clarify that during the transition period from the date of publication of the Opinions to the end of 2020, the issuance of new products by financial institutions must comply with the relevant provisions of the Opinions, which means that the newly issued bank capital preservation and wealth management officially died. With regard to the unexpired assets invested for docking existing products, the Opinions clarify that financial institutions can issue old products for docking to maintain necessary liquidity and market stability, but the overall scale of existing products must be strictly controlled and reduced in an orderly manner.

In view of the market demand for capital preservation, large deposit certificates or structured deposits can be used as an alternative choice for capital preservation and financial management. In order to guide in an orderly manner, the central bank accelerated the marketization of deposit interest rates, and many banks raised the interest rates of large deposit certificates. According to market research, many banks will sell certificates of deposit in May, and the deposit interest rate will rise by more than 50% compared with the benchmark interest rate.

The scale of structured deposits rose rapidly in the first four months of 20 18, which has attracted the attention of financial regulators and delayed or tentatively applied for the qualification of structured deposits of some local banks. In the future, banks with derivatives trading qualifications will increase the issuance of structured deposits, and some small and medium-sized banks will be further under pressure.

(3) Identification of qualified investors

The criteria for identifying qualified investors have been further tightened. Compared with the exposure draft, it is recognized that the average net assets of new households should not be less than 3 million yuan, and investors should not use non-owned funds raised by loans and bonds to invest in asset management products, blocking the policy loopholes of becoming qualified investors by borrowing and leveraging.

The Opinions did not further elaborate on the number of qualified investors, suggesting that there is a high probability that the limit on the number of 200 investors in private equity products, especially private banks, will be relaxed or diluted. According to product types and investors' requirements, private placement products need to be issued to qualified investors in a non-public way. Article 87 of People's Republic of China (PRC) Securities Investment Fund Law stipulates that non-public offering funds shall be raised from qualified investors, and the total number of qualified investors shall not exceed 200. Article 10 of the Securities Law of People's Republic of China (PRC) stipulates that under any of the following circumstances, stocks shall be publicly issued: ① securities shall be issued to unspecified objects; (2) More than 200 people have issued securities to specific objects; (3) Other issuance acts as stipulated by laws and administrative regulations. The "Eight Bottom Line Prohibition Provisions for Securities and Futures Operating Institutions to Carry out Asset Management Business" mainly regulates the behavior of securities and futures operating institutions to carry out private asset management business. Article 5 stipulates that the cumulative number of investors in the asset management plan shall not exceed 200.

The upper limit of 200 non-public offerings stipulated in the Securities Law is based on the fact that private equity securities are mostly issued by institutional investors and a few individual investors with huge wealth, while bank wealth management is mostly issued by ordinary people, so it is obviously inappropriate to apply the same identification standard. We believe that the reason why the Opinions do not limit the number of qualified investors is mainly due to the market reality: although the requirements for private placement information disclosure are low and the risks are high, the limited risks can be completely controlled by the criteria for the identification of qualified investors (such as the requirements for new family net assets); From the international experience, there is no limit on the number of qualified private investors in mature markets such as the United States. Asset management institutions that meet certain conditions can issue additional shares to any number of qualified investors without any amount limit.

However, there are still some problems in the identification of qualified investors. The Opinions do not specify how to identify qualified investors, but investors themselves issue certificates or statements. Or is it determined by the asset management institution according to its own standards? Regulators have not given clear and feasible opinions. If there is no unified identification process, it will cause many practical difficulties in the identification and on-site inspection of qualified investors who distinguish between public offering and private offering in the future.

(4) investor education and guidance on net worth transformation

Although the use environment of amortized cost method is relatively relaxed, which helps to promote the net transformation of bank wealth management business, considering the low-risk preference of bank wealth management customers and the break of rigid redemption, even from the formal level, the low acceptance of investors has made banks very headache. How to strengthen the education of net worth products at the investor level and guide investors to buy wealth management products will become the first big problem faced by the bank's wealth management sales side.

Under the pressure of the current regulatory environment adjustment, it is necessary to promote investors' awareness of net worth products. Even if investors' recognition of net-worth products cannot be realized immediately, it is necessary to quickly enhance the market recognition of net-worth products when the time is ripe. At present, commercial banks can enhance investors' acceptance of wealth management products of net worth banks from two aspects. First of all, from the perspective of wealth management products, it is a relatively feasible way to gradually introduce corresponding net worth products according to customer types. In other words, by introducing the corresponding net worth products to institutional customers, high net worth customers and ordinary individual investors step by step from top to bottom, the obvious customer loss and liquidity risk after the transition period can be avoided. Secondly, the changes in the supply-side environment will force the demand differentiation of investors to be more obvious, and a single wealth management product will be difficult to meet the increasingly diversified investment needs of customers. In the future, commercial banks must strengthen the exploration and positioning of customer needs, integrate deposit business, wealth management business and consignment business, create a perfect product pool, and realize the perfect match between product portfolio and customer needs with standardized, professional and integrated wealth management processes and advanced wealth management systems, so as to retain customers.

In addition, although the policy level vigorously promotes the industry to break the rigid exchange, it is proposed to give certain regulatory incentives to institutions that give priority to rectification. However, for banks, banks that take the lead in breaking the rigid payment and fail to pay their products on time will inevitably suffer huge credit losses, leading to the loss of customers, which will be transmitted to traditional businesses and have an impact on the overall development of banks. In other words, the intensity of regulatory incentives may only affect the progress of net worth transformation to a certain extent or within a certain time range, especially in the early stage of transformation, the impact of regulatory incentives on net worth is weak. Promoting the transformation of bank wealth management net worth may rely more on the rectification plan of asset management business submitted by commercial banks. It is expected that for banks with different levels of development, the timing of the asset management business rectification plan will be significantly different. Supervision may put greater pressure on the transformation of large and medium-sized banks and put forward higher requirements on their timing. After large and medium-sized banks take the lead in breaking the rigid exchange, small and medium-sized banks can carry out investor education more easily, and the overall industry transformation progress will be accelerated.

(five) sales compliance, integrity management, diligence.

The "Opinions" clarify that when financial institutions issue and sell asset management products, they need to adhere to the business philosophy of products and customers; It is forbidden to deceive or mislead investors to buy asset management products that do not match their risk-taking ability; It has a management system suitable for the development of asset management business, good corporate governance, and sound risk management, internal control and accountability mechanisms; Employees who violate relevant laws and regulations and the provisions of the Opinions will be punished according to law until their qualifications are cancelled, and they are prohibited from engaging in asset management business in other types of financial institutions.

The above requirements are the concrete embodiment of the regulatory authorities to rectify the chaos in the financial market, maintain market order and ensure financial stability. In fact, compared with the exposure draft, the Opinion adds the word "honest management" in many places, which shows the importance attached to compliance sales, honest management and diligence of financial institutions.

In the future, the regulatory authorities' punishment for illegal operation of asset management business is likely to increase. Banking institutions, especially small and medium-sized banks, must pay attention to the legal risks in the development of bank wealth management business, strengthen internal governance and related system construction, and enhance the professional quality and compliance awareness of business personnel.

(6) Acting to sell asset management products.

With the gradual establishment of equal access to the market mechanism, the development of wealth management business of small and medium-sized banks will face greater competitive pressure, and the development of wealth management based on consignment business is becoming a realistic choice for more banks.

However, the Opinions make it clear that consignment agencies need a license to sell asset management products, and relevant institutions without a license may not sell asset management products. Financial institutions need to establish a sales authorization management system for asset management products, clarify the access standards and processes of sales organizations, clarify the rights and obligations of both parties, and clarify the responsibilities and transfer methods of related risks. At present, Public Offering of Fund and other products need to be licensed by the regulatory authorities, but the regulatory authorities have not issued a license for bank wealth management products. It is not clear whether licensed non-bank institutions can sell bank wealth management products as agents.

Therefore, banking institutions must also operate in compliance when selling related asset management products as agents. In view of the problem of illegal sales, the Opinions on Further Deepening the Rectification of Banking Market Chaos focuses on the description, that is, products issued by institutions outside the supervision scope of financial regulatory agencies and without financial licenses shall not be sold; Do not confuse consignment products with deposits or self-issued wealth management products, and do not allow non-bank personnel to engage in product promotion and sales activities at business outlets; It is not allowed to promote or sell unapproved products in the name of affiliated institutions.

Compliance consignment depends on the construction of relevant systems, training systems and wealth management systems. Control the consignment of products from the source and analyze the characteristics of customer groups. On the one hand, we should match the needs of different users through product design and innovation, on the other hand, we should do a good job in brand building, really develop wealth management business, form brands and characteristics, and create new competitiveness for banks.

Second, the operation management

(a) Multi-level nesting and legal status issues

The Opinions basically deal with the problem of multi-layer nesting of asset management products in a similar way to the exposure draft, allowing asset management products to invest in another layer of asset management products, but the invested asset management products may not invest in asset management products other than public securities investment funds. In addition, the Opinions emphasize that private equity funds can be connected with private equity fund management products, giving private equity fund management market a competitive entrance.

On the issue of multi-layer nesting, bank financing can be described as the hardest hit. The reason is that the prosperity of multi-layer nested model is produced under the background of inconsistent market access and investment authority of financial institutions under different regulatory systems. To solve this problem, all types of asset management products must be given the same market treatment.

The Opinions classify asset management products according to the different ways of raising funds and the nature of investment, and apply uniform regulatory rules to similar products. This means that financial supervision and management departments and relevant state departments will give equal access and fair treatment to all kinds of financial institutions to carry out asset management business; Asset management products of the same nature enjoy the same status in account opening, property right registration and legal proceedings. It has solved the unfair legal restrictions faced by banks in carrying out wealth management business before, and looks forward to the improvement of subsequent supporting rules or laws and regulations, clearly giving bank wealth management products an independent legal subject status, and fundamentally solving the problems of bank wealth management investment in equity assets and derivative assets such as account opening or industrial and commercial registration. After the new regulations, wealth management products can open various accounts such as stock investment accounts, and at the same time, they can also register for industry and commerce and directly invest in limited partnership products.

In addition, because the regulatory authorities have not restricted asset management products from nesting the public offering securities investment funds in two layers, the public offering FOF and MOM models can still continue normally. On the premise that non-standard assets are limited and bank wealth management will focus on standardized assets, commercial banks can improve investment efficiency and reduce investment costs through FOF and MOM models, and at the same time, they can adjust the impact of economic cycle changes more quickly. Judging from the current participation of FOF and MOM, banks with higher wealth management business prefer MOM mode. Compared with the more standardized FOF model, in the MOM model, banks can better and more flexibly regulate the investment direction and investment managers, and have stronger control.

(2) Information disclosure arrangements

The Opinions clarify that financial institutions should actively, truthfully, accurately, completely and timely disclose information such as asset management products, capital investment, leverage level, income distribution, custody arrangements, investment account information and major investment risks to investors; Especially for different forms of asset management products, the content of information disclosure is different.

Complete information disclosure is helpful to strengthen the control of investors, regulators and market third-party institutions on the risks related to the operation of asset management products, so as to judge the management ability of asset management institutions more fairly and objectively. Strengthening information disclosure is not only an important way to effectively identify potential risks, but also helps to strengthen investor education, help guide the transformation of net worth of wealth management products, and finally realize the business philosophy that sellers are responsible and buyers are responsible.

(3) Asset management subsidiaries and independent custody

The Opinions clarify that financial institutions whose main business does not include asset management business should set up an asset management subsidiary with independent legal personality to carry out asset management business, strengthen the risk isolation of legal persons, and set up a special asset management business operation department to conduct business temporarily.

Opinions on bank financial management, such as risk isolation and business separation, are all based on asset management subsidiaries. In addition, the Opinions clarify that the assets of asset management products issued by financial institutions should be managed independently by third-party institutions with custody qualifications, unless otherwise stipulated by laws and administrative regulations. During the transition period, commercial banks with the qualification of securities investment fund custody business can trust their wealth management products, but they should open separate custody accounts for each product to ensure asset isolation. After the transition period, a commercial bank with the qualification of securities investment fund custody business shall set up a subsidiary with independent legal person qualification to carry out asset management business. Commercial banks can trust asset management products issued by subsidiaries, but they should realize substantial independent custody. Independent custody in name only shall be corrected and punished by the financial supervision and regulation department.

After the release of the Opinions, it is expected that banks with fund custody qualifications will accelerate the pace of setting up asset management subsidiaries. On the one hand, they will try to keep considerable wealth management product custody income in the bank; On the other hand, the efficiency and communication problems of bank custody can be easily solved, which is very necessary for some products.

(four) the implementation of penetrating supervision, expand the scope of submission.

This opinion has increased the requirements for process or information submission in many aspects, such as net worth management, fair exchange audit, artificial intelligence application and unified reporting system. It highlights the intention of the regulatory authorities to increase the whole process monitoring of asset management business, enhance regulatory penetration and avoid regulatory blind spots. Considering the great pressure on banks to submit at the end of the month and the end of the quarter, the new submission requirements may increase the pressure on the end of the month.

On the other hand, in the part of unified submission of asset management products, the Opinions still does not give a specific statistical system of asset management products compared with the draft for comments, and it is difficult to formulate a unified standard in the current situation of various products. It is expected that in the second half of the adjustment period, the statistical system of asset management products will give specific opinions.

Third, investment allocation.

(1) Non-standardized debt assets.

Compared with the exposure draft, the Opinions added the criteria for identifying standardized creditor's rights assets, that is, standardized creditor's rights assets should have the conditions of equal differentiation, tradeability, full information disclosure, centralized registration, independent custody, fair pricing, perfect liquidity mechanism and trading in the approved trading market in the State Council. The creditor's rights assets other than standardized creditor's rights assets belong to non-standard, but the specific identification rules are separately formulated by the People's Bank of China in conjunction with the financial supervision and administration department, which essentially leaves a loophole for non-standard conversion. Assets traded in relevant markets, such as Yindeng Center, Beijing Stock Exchange, CITIC Deng, etc. The regulatory authorities are likely to formulate other rules to confirm them in due course. Only after meeting the requirements of equal differentiation, tradeability, full disclosure of information, centralized registration, independent custody, fair pricing and perfect liquidity mechanism can it be recognized as a standardized asset.

The Opinions clarify that financial institutions can issue asset management products and invest in non-standardized debt assets, but they should abide by the regulatory standards such as quota management and liquidity management formulated by financial supervision and management departments. It shows that bank wealth management can still invest in non-standardized assets, but the requirements of total scale or limit management will be improved, and the previous requirements of 35% or 4% will be further adjusted, while the requirements of liquidity management will be clearly stated in another document.

In view of the problem that the investment period of asset management products is not standardized, the Opinions clarify that if asset management products directly or indirectly invest in non-standardized debt assets, the termination date of non-standardized debt assets shall not be later than the expiration date of closed-end asset management products or the latest opening day of open-end asset management products. Due to the transition period of nearly three years, old products can be issued during the transition period, and the unexpired assets invested in existing products can be docked, giving banks sufficient time for adjustment and transformation. If there are still unexpired non-standard assets after the transition period, the regulatory authorities can make appropriate arrangements, such as orderly guiding financial institutions to return to their balance sheets to ensure market stability.

In view of the unfairness among investors caused by non-standard investment in asset management products (mismatch of non-standard term will lead to unfair income distribution in the event of non-standard default), this problem is essentially a valuation problem of non-standard assets, which can be solved by making provision for impairment of non-standard assets. In order to solve this problem, the Opinions made an adjustment statement on the net worth generation mode relative to the draft for comments. The net value generation should conform to the principle of fair value, and the net value generation should conform to the provisions of the accounting standards for enterprises. Due to the lack of liquidity, non-standard wealth management can be valued according to the amortized cost method according to the provisions of the Ministry of Finance's Interpretation of Accounting Standards for Business Enterprises No.8, and provision for impairment can be made. After the depreciation of non-standard assets, the risk can be passed on to investors through the change of net worth. For example, at the time of initial investment, asset impairment will be accrued according to the model. During the duration, if there are signs of continued impairment, the impairment will continue to increase and the net value of the product will decrease. Investors who redeem their shares at this time will bear the corresponding losses. Other investors will bear the subsequent risks when buying at this time, but they will also get corresponding benefits. The summary of impairment is clearly stipulated in the product contract for investors' approval and continuous information disclosure. This method passed the third-party audit when it was implemented in banks, which met the requirements of accounting standards.

On the whole, the Opinions do not completely restrict non-standard investment, but make overall arrangements from the dimensions of non-standard bidding, non-standard regulatory standards, transitional arrangements, and net worth generation principles. In addition, the Opinions encourage financial institutions to raise funds by issuing asset management products under the premise of legal compliance and commercial sustainability, and invest in areas that meet the requirements of national strategies and industrial policies and meet the requirements of national supply-side structural reform policies; Encourage financial institutions to raise funds to support economic restructuring by issuing asset management products, support market-oriented and legalized debt-to-equity swaps, and reduce the leverage ratio of enterprises. While regulating non-standard investment, in order to better meet the financing needs of the real economy, the regulatory authorities will encourage the development of direct financing, build a multi-level capital market system, further deepen the reform of the financial system, and improve the efficiency and level of financial services to the real economy. This will create new business opportunities.

(B) restrictions on the investment scope of public offering and private offering products

The restrictions on financial investment of public banks tend to be relaxed. The previous "Draft for Comment" held that the public offering products of banks should be mainly fixed-income products, such as issuing equity products, which must be approved by the banking regulatory authorities; However, this condition was deleted from the Opinions, and it is clear that in addition to investing in standardized debt assets and listed stocks, public banks can also invest in commodities and financial derivatives, as long as they comply with laws and regulations and relevant regulations of financial management departments. This shows that due to the restrictions of classified management (basic wealth management business and comprehensive wealth management business), banks of various natures will not be able to invest in equity assets. For investing in the equity of unlisted enterprises, public banks can also participate in financing if laws, regulations and financial management departments make licensing provisions (such as the central bank makes adjustments according to the actual situation), which shows certain flexibility. The relaxation or dilution of the above restrictions is beneficial to all kinds of banks, especially small and medium-sized banks.

Private banks have great potential in financial management. For private placement products, compared with the exposure draft, the opinion has been specially added with a paragraph, discussing that the investment scope of private placement products is stipulated in the contract, and it can be invested in assets that meet the requirements of laws and regulations, such as creditor's rights assets, listed or listed stocks, unlisted enterprise equity (including debt-for-equity swaps), beneficiary rights, etc., and strictly abide by the requirements of appropriate management of investors. Encourage the full use of private equity products to support market-oriented and legal debt-to-equity swaps. This is a substantial benefit for large and medium-sized banks with more private banking customers, and they can further invest in asset securitization products and equity-based industrial funds.

Compared with the Draft for Comment, the Opinion has liberalized the restrictions on private placement. The relaxation of restrictions on private placement classification conforms to the different positioning of public offering asset management products and private offering asset management products, that is, public offering products are issued to the public with weak risk identification and tolerance, and the overall requirements are more stringent; Private equity asset management products are mainly for qualified investors with strong risk identification and tolerance, and the regulatory requirements are relatively loose.

(III) Valuation methods and outsourcing requirements

The Opinions did not relax the requirements for the overall net worth of bank wealth management products. For the net worth valuation methods that the market is most concerned about, two models, market value method and amortized cost method, are given. Among them, the market value method is based on the principle of fair value measurement of financial assets, which is highly respected by the regulatory authorities. The amortized cost method has the possibility of implicit redemption, so the regulatory authorities strictly control the possibility of rigid redemption from two aspects: the conditions of use and the limitation of the deviation between redemption performance and actual asset value. In the environment where the regulatory authorities vigorously crack down on rigid redemption, it is unlikely that commercial banks hope to achieve rigid redemption in a net worth coat.

For bank wealth management business, the valuation method of amortized cost method can greatly reduce the fluctuation performance of products during the operation period, which is more in line with the low-risk cognition and positioning of bank wealth management products. Therefore, the environment of amortized cost method has a great influence on the difficulty of bank wealth management business to promote the transformation of product net value. In this new regulation, from the premise of using the amortized cost method, the overall restrictions are relatively reasonable, and the assets that can be valued by this method include all creditor's rights assets held to maturity and some assets with poor liquidity. At present, among the main investment objects of bank wealth management, bonds+money market instruments+non-standard creditor's rights are as high as 72.32%(20 17 annual data), and these assets can basically be valued by amortized cost method, which is good news for commercial banks with high returns on stable assets.

Regarding the scope of application of amortized cost method, are products such as money funds that traditionally use cost method but are designed to be open-ended also facing the urgent problem of adjusting valuation methods? After the release of the new regulations on asset management, the regulatory authorities indicated that the regulations on the management of monetary funds remained unchanged. Does it also mean that banks can also create fund products similar to currencies and use the cost method for valuation? These questions need further answers from the regulatory authorities.

However, for commercial banks with weak or no active management ability, the demand for outsourcing will be further enhanced in the future. However, due to factors such as business scale and professional ability, small and medium-sized banks have a weak voice when docking with outsourcing institutions, and the problem of insufficient control over outsourced assets may be further highlighted. Especially in the environment where rigid redemption is broken, poor control over assets may increase the possibility of product losses, and then increase the reputation risk of banks. Therefore, while carrying out outsourcing business, small and medium-sized banks should consider strengthening the monitoring of outsourced assets by establishing an outsourcing system to reduce the occurrence of uncontrollable risks.