April 3, 2018 / 7:39 AM / 19 days ago

China steps up crackdown on online asset management sector: sources

SHANGHAI (Reuters) - China’s central bank has launched a two-month-long examination into online asset managers, Beijing’s latest step to curb financial risk in the $15 trillion asset management industry, two sources with knowledge of the matter told Reuters on Tuesday.

FILE PHOTO: A Chinese national flag flutters outside the headquarters of the People's Bank of China, the Chinese central bank, in Beijing, April 3, 2014. REUTERS/Petar Kujundzic/File Photo

Authorities across China will conduct checks from April to end-June in a bid to fend off systemic financial risk and protect social stability, the sources said.

A central bank document seen by Reuters stated that online asset management businesses without a proper license should clean up their existing businesses by end-June 2018.

News of the central bank examination comes as the market is waiting for the People’s Bank of China to release the final version of new rules for asset management businesses as part of widening crackdown on risk in China’s financial system.

Chinese President Xi Jinping approved the new rules in March.

The rules are expected to close loopholes that allow regulatory arbitrage, reduce leverage levels to curb asset price bubbles, and rein in shadow banking activity.

Selling asset management products without a license could be deemed as illegal fundraising, illegal acceptance of deposits and illegal issuance of securities, the document stated.

Reporting by Li Zheng and Shanghai Newsroom; Writing by Stella Qiu, Ryan Woo and Shu Zhang; Editing by Jacqueline Wong and Eric Meijer

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