In the past, there is a long-term task for banks to correct the credit maturity problem, that is to say, there is a long-term task for the old banks to make up for this problem. It can be seen that the transformation of financial products must adhere to the principle of seeking truth from facts, fully respect the reality, and should not be too hasty. And we should really implement one line and one policy to prevent one size fits all and go in step. Xiao said.
In addition, he stressed that the development of asset management institutions after the transformation must be carried out in accordance with the fiduciary obligations in the securities law and the securities investment fund law. If we continue to engage in channel business like the original, we will not only violate the rules, but also bear legal responsibility if we lose the case.
Talking about cultivating a healthy investment culture, Xiao Gang said: just like our commercial banks used to engage in credit business for a long time, it takes at least eight years to train a credit manager. If we engage in asset management business, it will take you more than 8 years to train a qualified investment manager. To experience popular rotation, know the ups and downs of the market, will have experience. We believe that as long as we stick to the right direction and make contributions for a long time, we will surely usher in a bright future for Chinas asset management industry.
The following is the original speech of Xiao Gang:
Today, I would like to share with you the theme of orderly promotion of Chinas asset management industry transformation. Two years after the promulgation of the new regulations on asset management, financial risks have been prevented and resolved, and the ecology of asset management industry has been reshaped. The rigid cashing of asset management products has been gradually broken down, the term mismatch and multi-layer nesting have been gradually corrected, and the legal supervision system has been improved, which has created good conditions for promoting the transformation and development of asset management industry in China. At present, the transformation and development of asset management industry has reached a consensus, and important steps have been taken. However, the road of transformation is still a long way to go, facing many difficulties and challenges. It is necessary to further balance the financial reform, development, stability and opening up, so as to better meet the needs of the real economy and wealth management of residents. I would like to talk about the following three questions.
First, promote the smooth transition of asset management industry.
At present, the new asset management regulations are in the transitional period, and the new and old products coexist. On the one hand, the scale of the stock assets is very large, and it is difficult to dispose of them. There are many obstacles to non-standard transfer to standard, and it is unrealistic to undertake the return statement. Through asset securitization and corporate bond issuance, a small number of non-standard products can be digested, but the problem can not be fundamentally solved. On the other hand, the funds raised by new net worth products are far from meeting the needs of old products, and the degree of customer acceptance needs to be improved. Medium and long-term financial products are more difficult to raise. Now the rate of return on assets is getting lower and lower, and it is more difficult for financial institutions to obtain assets with better returns. The education of investors is still a long-term systematic project, so we should grasp the rhythm and strength of handling risks in the transitional period.
Recently, the peoples Bank of China has just issued an announcement to extend the transition period of asset management products to the end of 2021. I think this is a concrete manifestation of the implementation of the Central Committees proposal to deal with the balance between stable growth and risk prevention, and it is also a necessary measure to respect the market law and proceed from reality to promote the development of the real economy. In fact, it is the delay of the transition period of rectification. In essence, it is to deal with the relationship between six stabilities, six guarantees and prevention and resolution of financial risks.
In recent years, many business changes of financial institutions are closely related to the requirements of new asset management regulations. For example, the transformation of bank financial products in the previous period mainly relies on cash management products, because the cash management products can be accounted by using the amortization cost method compared with monetary funds. The investment scope is wider than that of monetary funds, and the rate of return is higher. Therefore, as an important product in the transition of asset management, it has a substitution effect on the current deposits of residents, and it also highly coincides with the customer groups of banks. Moreover, the yield and convenience of cash management products have greater advantages than current deposits, but such products have higher credit risk and liquidity risk.
At present, there are many discussions on the nature and positioning of this product, as well as how to regulate it. It should be said that there are still differences. In other words, whether to use cash asset management products as a strict liquidity management tool or as a financing tool. As a financing tool, it has a wide range of investment, of course, it can play a supporting role in the real economy, but after a wide range of investment, credit risk and liquidity risk will come at any time. Therefore, in the previous period, the transformation of bank asset management products mostly depended on cash management products, and there are many differences between them and our current monetary fund products. No matter how to transform, I think we need to conduct a careful, in-depth and comprehensive evaluation. Therefore, the adjustment of regulatory rules needs to proceed from reality and balance the relationship between risk prevention and market stability.
For another example, in order to speed up the transformation of financial products, banks develop structured deposit products, because they are the best alternative products for bank principal guaranteed financial products. Structural products should be linked derivatives with investment risks. In order to transform to net asset management products, there was a blowout of issuance of structural deposits in the previous period. But in fact, we all know that quite a lot of them are fake structural deposits, not real structural deposits. In fact, they have become a kind of high interest rate deposit.
By the end of May this year, the structural deposit balance of Chinese banks had reached 11.84 trillion yuan. After several ups and downs in the last two years, it has grown rapidly since this year, especially the peak in May. Later, the regulatory authorities took measures to rectify the false structured deposits. Therefore, the volume and price of structured deposits fell again after June. In June alone, the amount of deposits decreased by more than 100 billion yuan compared with that in May. Therefore, it also shows that it is very necessary and important to grasp the rhythm and strength of the new asset management regulations during the transition period and the period of reorganization.
At the same time, it should be noted that the issuance of inter-bank certificates of deposit of commercial banks has also shown a trend of rising both in volume and price recently. Because structural deposits have been curbed and fake structural deposits are not allowed to be carried out, the issuance of inter-bank certificates of deposit has increased substantially since July in order to make up for the gap in bank liabilities.
In the first half of the year, the banks on balance sheet credit increased by 13 trillion yuan, and the credit task has been aggravated. The funds of some original products need new funds to continue. So banks have to take a lot of measures to make up for the debt. Of course, in order to exaggerate the proportion of net worth financial products to reflect the transformation achievements, some banks have adopted some non-compliance measures. The net value curve of some new products is extremely smooth without market fluctuation. Some even transfer high-yield assets to assets that have already suffered losses, so as to smooth the income gap between them. In fact, they have realized the rigid exchange in disguise. This is the same as the recent bancassurance bureaus around the country have punished a batch of false reports of loan data of small and micro enterprises. Individual banks boast in this respect.
It can be seen from the above analysis that financial disintermediation is an inevitable trend, that is to say, the savings deposits of residents in banks will gradually decrease. However, due to the fact that banks dominate the social financing system and the task of increasing credit is very heavy, it will take quite a long time to correct the problems existing in shadow banking in the past. That is to say, under the background of a large increase in new bank credit, it is a very arduous task to make up for the capital gap due to the maturity of old products. It can be seen that the transformation of financial products must adhere to the principle of seeking truth from facts, fully respect the reality, and should not be too hasty. And we should really implement one line and one policy to prevent one size fits all and go in step.
Second, I would like to talk about the development of direct financing, especially equity financing, which is the essential requirement of asset management transformation.
Promoting the transformation of asset management industry is an important content of deepening the structural reform of the financial supply side, and also the key task of adjusting the structural imbalance of the financial system. That is to effectively increase the proportion of direct financing, develop the capital market, serve the needs of innovative economy and high-quality development, and solve the indirect financing mode of excessive dependence on banks. For a long time, Chinas commercial banks rely on national credit and bank credit, have the ability to mobilize savings and allocate funds efficiently, and play the leading role of banks, which greatly promotes the economic and social development, which should be attributed to. At the same time, we should also see that when we enter the late stage of industrialization, the advantage of capital market in resource allocation is more significant. Market mechanism can price unknown risks, improve the efficiency of resource allocation, share risks and interests in scientific and technological innovation, promote the formation and circulation of capital, promote the agglomeration of production factors to innovative economy, and promote corporate governance and social supervision High efficiency of economic operation.
The newly promulgated securities law clarifies the securities nature of asset management products. From the fundamental nature, to apply trust relationship, we should follow the requirements of securities investment fund law and securities law. Therefore, direct financing, especially equity financing, should be promoted. In order to expand the direct financing and develop the capital market, we must vigorously develop professional institutional investors.
Whether it is a financial subsidiary of the banking system, or securities companies, funds, trust, insurance and other asset management products, they should comply with the provisions of the securities investment fund law. In order to further promote the healthy development of asset management industry, the Supreme Peoples court in civil and commercial trials, according to the nature of legal relationship of asset management products, has made a judges discretion guidance on the possible legal blind areas and controversial points.
Here, I will give some examples. For example, credit reference documents that clearly do not comply with the new regulations on asset management can be regarded as rigid cashing. If a credit reference document is issued, if it does not comply with the new regulations on asset management, it is deemed as a minimum guarantee or a rigid payment clause, which is legally invalid.
This is the latest and clear stipulation of the Supreme Peoples court. And how to judge whether you are rigid cashing? It emphasizes that the examination should not be based on the form, but through the substance. Whether it is in line with the minimum guarantee and just confirmation is not determined by the form of your terms, but by penetrating the substance. Another example is the prohibition of channel business. Of course, the Supreme Peoples court has made it clear that the channel business is still valid during the transitional period. Once the transition period is over, all channel services are invalid and have no legal effect.
Another example is the right to return on assets. The right to return on assets is not the exercise of rights stipulated in the property law. It was created by financial institutions in the process of financial innovation. In the past, there was no legal support. However, in practice, the transfer of usufruct of assets is very common, and the new asset management regulations also regard the right to income as a kind of asset. Therefore, the Supreme Peoples court has confirmed the legal effect of the usufruct of assets as the object assets of asset management business.
Another example is the litigation preservation of the inherent property of asset management institutions. Trust property is independent of the inherent assets of the trustor, trustee and beneficiary. When the asset management institution is the defendant, it should take the execution measures that are convenient for the execution of its inherent property and have the least impact on the normal operation. In other words, we often say that we should try our best to adopt the live seal and live clasp. When you want to divide his property and detain his property, you should reserve the necessary working capital and current account for the asset management institution when necessary. This is an additional protection for the asset management institution.
For another example, the principle of the appropriateness of products sold by asset management institutions is also stipulated, and the seller should bear the burden of proof. This is particularly important, that is, whether you have implemented your sales obligations, not your customers to provide evidence, but you have to provide evidence yourself, and you have to bear the burden of proof, and if you fail to perform your obligations according to the regulations, you should bear the joint and several liability for compensation. The Supreme Peoples court has made clear that the rules and regulations of the financial supervision department, if they do not conflict with the provisions of the law, may be applied by reference in the trial. That is to say, some regulatory documents of the regulatory authorities can be used as a basis in the trial, provided that they do not conflict with national laws. This means that if the financial institutions lose the lawsuit, they should bear the legal responsibility. You may have to bear legal responsibility in the litigation for your past violations and violations of regulatory documents.
Let me take another example. Recently, a branch of a large state-owned bank sold financial products on behalf of others, resulting in disputes. After the third trial, the final judgment has been made and the judgment has been made. In this case, the bank is selling on behalf of others, but the customer lost 180000 yuan, so the customer asked the bank to lose money.
In the first instance, the court held that the bank was not responsible for selling products on a commission basis, so it rejected all claims. The client continued to appeal, and the second instance decided that the bank should bear the main liability for compensation. Because the bank did not evaluate customers before recommending financial products, and did not fulfill the obligation of appropriate recommendation. The bank also appealed, and the court of third instance was the final one. The judgment was made according to the principle of the buyer being responsible for his own responsibility and the principle of the sellers due diligence. That is, the customer is mainly responsible for the loss of principal. The bank has faults in the sales process, so it should bear the corresponding compensation liability for the loss of the customers principal.
This is the first case of our country about the bank selling financial products on a commission basis. The transformation and development of our asset management institutions in the future must be carried out in accordance with the trust relationship and the fiduciary duty of the securities investment fund law. If we continue to engage in the so-called channel business like the original one, we will not only violate the rules, but also bear legal responsibility if we lose the case in the trial.
Third, I would like to briefly say that the fundamental purpose of enhancing the competitiveness of asset management institutions and promoting the transformation of asset management industry is to enhance the international competitiveness of Chinas asset management industry.
By the end of the first quarter of this year, the scale of Chinas open-ended public funds has risen to the fifth place in the world. At the end of last year, we were the eighth, and in the first quarter of this year, we rose to the fifth. Because many countries are seriously affected by the epidemic. If we add public funds, trust products and other asset management products together, we should say that China ranks the third largest asset management market in the world, second only to the United States and the United Kingdom, and is expected to surpass Britain next year. Based on the global wealth report released by Credit Suisse, Chinas total household wealth ranks second in the world, and its share of global wealth will rise from 16% in 2018 to 19% in 2023.
It can be seen that the development potential of Chinas asset management market is huge. To build an excellent and professional asset management organization, the most important thing is to determine the strategic positioning, investment philosophy and corporate culture of the institution, and put the interests of customers in the first place. This is a slogan that everyone is saying, but it is easy to know and difficult to do. The key is to truly create value for customers from the aspects of investment logic, investment research, investment system, investment discipline, investment process, investment team and investment assessment. We should resolutely abandon the mode of credit like business, continue to cultivate the ability of active management, especially the ability of asset pricing, product creation, financial technology, professional sales and compliance risk control. We should avoid the old road of product convergence and service homogenization, and provide customers with market support and value concepts that are not oriented by sales. I think this is very important. When you want to contact with customers, all our financial institutions aim to sell products. However, as an asset management institution, you must continuously provide customers with non sales oriented knowledge and value investment concept, and strictly screen and screen customers, not blindly welcome them Only in this way can we guide the development of asset management business towards diversification and standardization.
With the expansion of financial opening up, overseas professional asset management institutions have entered the Chinese market. At present, global well-known asset management companies and large hedge funds have been deployed in China, which will play a positive role and positive impact on promoting reform, improving service quality, developing diversified and differentiated asset management business, promoting marketization, legalization and internationalization of asset management business, and improving the competitiveness of Chinese funded institutions. At the same time, it will bring new opportunities and challenges to Chinese funded institutions in product and service competition. How to learn from each others strong points to make up for the weaknesses, make use of more space, and expand the going global operation, also need us to seriously study and deal with.
With the coming of digital era, the development of Chinas asset management industry has also put forward new challenges. After the digitization of assets, the ability to choose the target of assets is facing new problems and situations. Stock is the securitization of shareholders equity, bond is the securitization of creditors rights, and mortgage security is the securitization of bank credit. After the digitization of assets in the future, it will naturally have liquidity and may produce digital asset securities. How to understand the value of assets and how to bring them into portfolio management need to be re studied. In addition, the operation of asset management institutions, including the front, middle and back office, will also be driven by data. Intelligent investment consultants, intelligent investment, intelligent customer service and intelligent risk control will also develop rapidly. These can not only improve efficiency, promote inclusive, but also bring new issues to protect the rights and interests of customers and prevent security risks.
In short, it is a long-term systematic project to promote the transformation of Chinas asset management industry and reshape the ecology of asset management market. There is still a long way to go. It is impossible to cultivate a mature and healthy investment culture and create experienced investment managers who have experienced popular rotation. Just like our commercial banks used to engage in credit business for a long time, it takes at least eight years to train a credit manager. If we want to cultivate a qualified investment manager in asset management business, Im afraid it will take more than eight years for us to train a qualified investment manager. He will have experience only after he has experienced the popular rotation and knows the ups and downs of the market. We believe that as long as we stick to the right direction and make contributions for a long time, we will surely usher in a bright future for Chinas asset management industry. I want to share it with you today. Thank you for listening. I also wish the 2020 China Asset Management annual meeting a complete success. (author: Zhou Yanyan, editor: Ma Chunyuan) source: 21st century economic report editor in charge: Wang Xiaowu_ NF
In short, it is a long-term systematic project to promote the transformation of Chinas asset management industry and reshape the ecology of asset management market. There is still a long way to go. It is impossible to cultivate a mature and healthy investment culture and create experienced investment managers who have experienced popular rotation. Just like our commercial banks used to engage in credit business for a long time, it takes at least eight years to train a credit manager. If we want to cultivate a qualified investment manager in asset management business, Im afraid it will take more than eight years for us to train a qualified investment manager. He will have experience only after he has experienced the popular rotation and knows the ups and downs of the market. We believe that as long as we stick to the right direction and make contributions for a long time, we will surely usher in a bright future for Chinas asset management industry.
I want to share it with you today. Thank you for listening. I also wish the 2020 China Asset Management annual meeting a complete success.