The China Securities Regulatory Commission (CSRC) has launched a consultation on rules for private investment funds of funds, proposing eligibility criteria, diversification requirements and operating standards. The draft would specify the conditions for applying the existing regulatory exemption that excludes qualifying funds of funds from the count of investment layers. It also provides for differentiated investment ratio requirements for long-term capital investing in these funds, with the stated aim of supporting allocations by investors such as social security funds and insurers. The proposals would classify funds of funds by investment scope and impose ongoing requirements on managers according to the types they manage. Managers would be responsible for active management, supported by post-investment monitoring, oversight of underlying investments and risk monitoring mechanisms. The draft also addresses custody, conflicts of interest and related-party transactions, and specifies prohibited investments. The consultation follows broader State Council-backed guidance published in June that called for tighter private fund supervision while supporting the development of funds of funds and investment by medium- and long-term capital.
China Securities Regulatory Commission consults on private funds of funds rules covering diversification, investment layers and manager duties
The China Securities Regulatory Commission is consulting on private funds of funds rules that would define eligibility for an existing investment-layer exemption and set diversification requirements. The proposals also cover differentiated investment ratios for long-term capital, ongoing manager requirements and controls over underlying investments, conflicts of interest and prohibited investments.