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China Reins in Online Money Market Funds

The mainland’s online money market funds are now subject to greater regulation following a joint intervention by the China Securities Regulatory Commission and the People’s Bank of China. With the apparent aims of protecting investor interests, maintaining a fair and orderly market and reducing any risk to the wellbeing of the overall financial system, the following measures were implemented as of 1 June this year:

Tougher Licensing Requirements

Unless duly licensed, it is prohibited for any individual or institution to promote money market funds online, nor can they benefit from any profits accruing from sales settlement fees or from the proceeds of any withdrawal made via the T+0 redemption mode (where “T” signifies the time and date of the transaction and “+0” indicates the post-transaction settlement period in days).

T+0 Redemption Limit

Any institution or individual can only redeem a maximum of RMB10,000 (US$1,470) per day, per sales institution from any money market fund via the T+0 settlement mode. The right of investors to make any other statutory redemption in line with their contractual agreements remains unaffected.

Advance Payments Curtailed

Except for those commercial banks that have been granted a statutory entitlement to sell such funds, all other institutions and individuals are prohibited from making any form of advance payment related to withdrawals made under the “T+0” settlement mode.

For further details (in Chinese), please visit the following link:

Guiding Opinions on Further Regulating Services Concerning Internet Sales and Redemption of Money Market Funds

Content provided by Picture: HKTDC Research
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