China's National Financial Regulatory Administration opens consultation on rules for asset management trust products

China's National Financial Regulatory Administration published draft Administrative Measures for Asset Management Trusts for public consultation, setting a framework for trust companies’ asset management trust business. The draft positions asset management trusts as privately offered asset management products based on a trust legal relationship, to be sold on a non-public basis only to qualified investors under a “seller fulfils duties, buyer bears risk” approach, with legal compensation where the seller is at fault. The draft proposes end-to-end controls covering product establishment, distribution, ongoing management and maturity liquidation, including stricter rules on the use of trust funds, risk management and net asset value management, and expanded information disclosure obligations. It tightens sales requirements around trust documentation, risk disclosures, investor undertakings and risk assessments, strengthens suitability management, and regulates sales practices by trust companies and third-party selling agents. On investment management, it sets requirements for investing in different types of underlying assets, refines portfolio investment rules, regulates related-party transactions, bans channel-type business and fund pool business, and introduces look-through management for investments in other asset management products to increase transparency. The authority will revise and finalise the measures based on feedback received through the public consultation process before issuing them for implementation.