Securities regulator picks ‘major’ money market funds

China’s securities regulator recently identified a number of newly designated major money market fund products and has put them under enhanced oversight, as part of the country’s efforts to anchor investors’ expectations and promote the sound development of its capital market.

The China Securities Regulatory Commission designated 13 such products as “major” money market funds to comply with stricter regulatory requirements under rules jointly issued by the People’s Bank of China, the country’s central bank, in February last year, the commission said in a statement on Friday.

Money market funds with assets under management exceeding 200 billion yuan ($27.8 billion) or having more than 50 million individual investors, as stipulated in the rules, will be subject to evaluation for inclusion on the list.

Money market funds from China’s top three asset-management firms – E Fund, China Asset and GF Fund, as well as from four other major money managers such as ICBC Credit Suisse Asset Management and China Universal Asset Management – are on the list, according to the statement.

Money market funds have gained popularity among investors seeking safe, liquid investment options that offer competitive yields, said Yang Chengzhang, chief economist with Shenwan Hongyuan Securities.

With their unique characteristics, such as stable net asset value and short-term investment horizons, money market funds have emerged as an attractive choice for individuals seeking to preserve capital while generating modest returns, Yang added.

The recent announcement of the major money market fund list reinforces the industry’s risk resistance capabilities, Yang said, adding that by subjecting funds to a comprehensive evaluation process, regulatory authorities aim to ensure that these funds adhere to stringent standards and possess robust risk management practices.

Going forward, the commission will conduct assessments of money market funds on a regular basis, so as to include those that meet the criteria for listing among the major money market funds as appropriate, and will publicize information in accordance with relevant regulations.

Data from financial information provider Wind shows that, as of the end of last year, certain money market fund products from investment management firms such as Fullgoal Fund, CCB Investment and Ping An UOB Fund are on the verge of being included on the list based on either their asset volume or individual investor scale.

The commission, along with the PBOC, will make joint efforts to strengthen the risk monitoring and daily supervision of key money market funds, aiming to promote a safer and more stable operation of money market funds while safeguarding the legitimate rights and interests of fund shareholders.

Also on Friday, the commission revealed that it has investigated and dealt with a number of employees of China Merchants Securities for engaging in unauthorized stock transactions and other illegal trading activities, in a bid to maintain market integrity and enforce strict adherence to securities regulations.

Previously, the commission announced the first administrative penalty decision of this year, fining Beijing-based Ruihua Certified Public Accountants 17.83 million yuan for taking part in the financial fraud case of KDX, a supplier of polymer materials, from 2015 to 2017.

KDX’s mandatory delisting from the Shenzhen Stock Exchange was enforced in 2021.