中文


2019-05-15     

CBIRC Issues the Notice on Insurance Funds’ Participation in the Business of Credit Risk Mitigation Tools and Credit Protection Tools

 

In order to enhance the role of insurance funds in serving the real economy, and enrich the utilization of insurance funds, the CBIRC recently issued the Notice on Insurance Funds’ Participation in the Business of Credit Risk Mitigation Tools and Credit Protection Tools (hereinafter as the “Notice”).

 

The Notice is a vital measure of the CBIRC to implement the central government’s guidelines of supporting the financing of private enterprises. Insurance funds’ participation could further enrich the investment tools for insurance funds and offer hedging tools for credit risk management; it can also fully activate insurance funds and make full use of them as long-term stable funds, so as to better support the financing of private enterprises; additionally, it can improve the investor structure and liquidity of bonds issued by private enterprises and promote the bond issuance.

 

The Notice is aimed to allow and regulate the insurance funds’ participation in the business of credit derivatives. In the Notice, seven requirements are specified. The main contents are: first, the participation purpose should be clarified. The insurance funds’ participation in the business of credit derivatives is only limited to hedging risks and the funds cannot be risk takers. Second, the qualifications of the participants should be clarified. To participate in the business of credit derivatives, insurance organizations must have the capability of managing derivatives and credit risks. Third, the insurance funds’ participation should follow both the CBIRC’s rules on financial derivatives trading and the business rules of National Association of Financial Market Institutional Investors (NAFMII), Shanghai Stock Exchange (SSE), and Shenzhen Stock Exchange (SZSE). Fourth, risk management should be strengthened. Insurance companies should formulate relevant management rules and operating procedures, monitor and regularly assess risks, and report to the CBIRC monthly, quarterly and annually.

 

Going forward, the CBIRC will continue to support financing the real economy through various channels, and improve the quality and efficiency of serving the real economy.



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