PRC Financial Regulation Annual Report (2026) Wealth Management And Asset Management

2025 Regulatory Milestones

On January 27, the Several Opinions on Strengthening Supervision, Preventing Risks, and Steering High-Quality Development of the Trust Industry  were issued. Several fundamental regulations in the trust industry were revised during the year.

On March 21, the National Financial Regulatory Administration (“NFRA”) issued the Administrative Measures for Commercial Banks' Agency Distribution Business.

On April 3, the China Securities Regulatory Commission (“CSRC”) issued the Administrative Measures for the Securities Investment Fund Custody Business (Draft Revision for Public Comments)  (“Draft Fund Custody Business Measures”).

On May 7, the CSRC issued the Action Plan for Steering High-Quality Development of Publicly Offered Funds(“Public Fund Action Plan”). The relevant rules which are aimed at implementing some of the requirements under the Public Fund Action Plan were issued during the year.

On July 11, the NFRA issued the Administrative Measures for the Suitability Management of Products of Financial Institutions, and on December 22, issued the Administrative Measures for Information Disclosure of Asset Management Products of Banking and Insurance Institutions  to enhance the investor protection framework.

On July 21, the Implementation Rules for Cross-Border Asset Management Pilot Business in Hainan Free Trade Port  were issued. As of December 17, seven institutions had obtained the pilot qualifications.

On September 1, Pramerica Insurance Asset Management Co., Ltd. was approved to commence operations. On December 30, AIA Insurance Asset Management Company Limited and Aegon Insurance Asset Management Company Limited were approved to commence operations.

On October 27, the CSRC issued the Work Plan for Improving the Qualified Foreign Investor Regime(“QFI Work Plan”) and the Service Guide for “One-Stop” Qualification Approval and Account Opening for Qualified Foreign Investors.

On November 26, the Insurance Asset Management Association of China was renamed as the Banking and Insurance Asset Management Association of China, which has incorporated bank wealth management companies under its self-disciplinary supervision and service scope.

On December 12, the NFRA issued the Administrative Measures for the Custody Business of Commercial Banks (Trial)  (“Administrative Measures for Bank Custody Business”), marking a new stage of systematic, detailed supervision of the custody business of commercial banks.

On December 31, the CSRC issued the Administrative Provisions on Sales Fees of Publicly Offered Securities Investment Funds, signaling the implementation of the third phase of fee reduction reform in the public fund industry.

On December 31, the CSRC issued the Announcement of the China Securities Regulatory Commission on Launching the Pilot Program for Commercial Real Estate Investment Trusts  and the Notice on Steering the High-Quality Development of the Real Estate Investment Trusts (REITs) Market. On the same day, the Shanghai Stock Exchange (“SSE”) and Shenzhen Stock Exchange (“SZSE”) issued revised implementation rules.

2025 Key Regulatory Observations

1. New regulations were issued throughout the year to concretize the achievements of the New Asset Management Rules

After the ending of the transition period for the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions  (“New Asset Management Rules”), the asset management industry entered a new stage of development, while challenges still remained for the runoff of certain products (including large collective asset management plans of securities companies¹, private asset management plans of financial institutions regulated by the CSRC, and bank wealth management products) which were placed under a case-by-case handling model. In 2025, the “final” rectification deadlines for these products became imminent, and the pace of rectification and liquidations picked up in order to satisfy the regulatory requirements.

In 2025, the regulatory authorities issued various new regulations and consultation papers to fortify the progress of rectification achieved under the New Asset Management Rules. The Administrative Measures for Asset Management Trust Business (Draft for Public Comments)  (“Draft Asset Management Trust Measures”) were finally issued, marking the implementation of the New Asset Management Rules in the trust industry. Separately, specific business rules covering suitability management, sales behaviors and investment conducts were issued, which aim to prevent regulatory arbitrage by aligning regulatory requirements for common business categories involving multiple regulators and product types. For instance, the Administrative Measures for Information Disclosure of Asset Management Products of Banking and Insurance Institutions  were issued at the end of 2025, which basically harmonized disclosure standards for asset management products under the NFRA regime with those under the CSRC regime.

Following the passing of the New Asset Management Rules, many financial institutions sought to develop their asset management business through dedicated asset management subsidiaries. However, in 2025, the pace of establishing new subsidiaries slowed. Furthermore, applications by asset management subsidiaries of securities companies for publicly offered fund licenses (some of which were made for the purpose of restructuring large collective asset management schemes) gradually decelerated such that by the end of 2025, the queue of applicants was reduced to zero, with some of the applications being voluntarily withdrawn. There are multiple reasons for this, including extensive regulations and intense competition resulting from the implementation of the New Asset Management Rules. Instead, these institutions continued to be active in the asset management business through business cooperation, such as the provision by small and medium-sized banks without such subsidiaries of distribution or custodial services for other firms’ asset management products, and transfers by securities companies without publicly offered fund licenses of large collective asset management schemes to other publicly offered fund managers. The division of labor in the industry became more specialized and detailed.

2. Multiple initiatives implemented to realize high-quality development of the public fund industry

In May 2025, the CSRC issued the Public Fund Action Plan. Its tenets include “putting investors at the center and their best interests at the core”. The CSRC aims to implement a series of policy measures within a period of approximately three years.

The relevant policy measures under the Public Fund Action Planare primarily reflected in three aspects:

Specific measures to address industry problem areas. For example, to address the issue of unsatisfactory investor returns, fund management companies are required to establish appraisal and renumeration systems centered on fund investment returns. Separately, measures for individual products include further reducing costs for investors, issuing regulatory guidelines on benchmarking to be used for, amongst others, product positioning, product performance measurement, regulating investment behavior and promoting variable fees based on performance benchmarks, and enhancing disclosure by actively managed equity funds on performance, fee levels etc. to assist investors in decision-making. As a whole, these measures stress a shift of focus in the industry from scale to returns.

Guidelines to drive transformation and improve the structure of the industry. for example, improvements to the regulatory classification and evaluation system by introducing benchmarks such as investor profit/loss (absolute value and percentage), performance against benchmark, percentage of equity funds and investment research capabilities, improving registration processes for equity funds, steering innovation by equity funds, aggressively developing on- and off- exchange index funds, and supporting capital market investments by medium- and long-term capital.

Strengthening law enforcement. The Public Fund Action Plan clearly expresses strict regulation of illegal activities including market manipulation and insider trading. Building on issues identified in previous audits by the National Audit Office, the Public Fund Action Plan applies the same strict regulation towards behavioral “gray areas” such as leaking dividend information, assisting tax evasion, and channeling improper benefits during the fund distribution process.

During 2025, some of the measures mentioned above were implemented or issued for public comments. For example, the Administrative Provisions on Sales Fees of Publicly Offered Securities Investment Funds  was issued at the end of 2025, marking the implementation of the third phase of fee reductions in the publicly offered fund industry. It is reported that the Asset Management Association of China (“AMAC”) revised its guidelines on performance appraisal and distributed them to certain fund management companies, potentially signaling significant changes to performance appraisal in the publicly offered fund industry. Other policies were put into effect in areas such as benchmarking, disclosure, suitability, sales behavior, participation in listed company governance and professional ethics.

3. Significant new regulation of asset management trusts to implement the New Asset Management Rules

The passing of the New Asset Management Rules had been accompanied gradually by implementation rules in sectors such as bank wealth management, securities and futures asset management and public funds. In October 2025, the NFRA issued theDraft Asset Management Trust Measures, filling the void in the trust sector for such implementation rules.

In general, the Draft Asset Management Trust Measures align with rules applicable to bank wealth management, securities, funds and other types of asset management products. For example, the Draft Asset Management Trust Measures expressly apply “custody” requirements to asset management, replacing the “safekeeping” requirement in the current rules. The Draft Asset Management Trust Measures supplement the existing rules by adding monitoring of trust company investments to the responsibilities of custodians and expand the scope of custodians’ responsibilities from cash to all trust assets. Moreover, given the widespread use of trust business as an investment channel in the past, the Draft Asset Management Trust Measures impose higher requirements on trust custodian banks relative to other types of asset management products. For example, under specific circumstances stipulated in the Draft Asset Management Trust Measures (e.g. if a trust accepts investment from other trusts or asset management products), custodian banks are required to aggregate the number of investors of the upper-level trusts, or conduct look-through verification of the actual investors and ultimate funding sources of the asset management products.

It is worth noting that the Draft Asset Management Trust Measures may have a significant impact on existing asset management trust businesses. For example, similar to other asset management products, the Draft Asset Management Trust Measures propose portfolio diversification requirements for trust products, stipulating that the amount invested by a single trust product in the same asset shall not exceed 25% of the paid-in capital of the trust product. However, under the commonly seen TOF model in the industry, a trust scheme invests nearly all its funds in a single project, such as a QDLP/QDIE fund. This business model might cease to be viable under the new requirements.

Furthermore, with the unique advantages of the trust business in asset segregation and bankruptcy remoteness, compared to other asset managers, trust companies are expected to capitalize on their differentiation in specialized areas such as asset custody, administration management, and risk segregation, as well as in philanthropic activities, thereby providing more diversified asset services and wealth management services.

4. Upgraded regulations in the custody industry reinforce custodians’ responsibilities

The scope and boundaries of custodians’ duties and responsibilities have in practice not been free of controversy, with different regulatory authorities and industry associations applying different requirements on the discharge of certain responsibilities by custodians. In 2025, the NFRA and the CSRC respectively issued or amended fundamental rules in the custody business. To a certain extent, this has helped to harmonize regulatory intents and requirements.

In December 2025, the NFRA issued the Administrative Measures for Bank Custody Business, which systematically regulate the commercial banks’ custody business for the first time. The Administrative Measures for Bank Custody Business aim to clarify the boundaries of custodians’ duties and responsibilities, and stipulate special requirements for the custody of non-standard assets. The Administrative Measures for Bank Custody Business are expected to impact the industry significantly. Whilst they take into account, to a certain extent, the difficulties of the custodial business and the discrepancies between the specific rules applicable to the different products, they fail to fully avert discrepancies in custody requirements between products. For example, the Administrative Measures for Bank Custody Business clearly provide that banks conducting custody business shall not assume credit risk, market risk, or liquidity risk, and in light of this requirement it remains to be seen whether banks, as custodians of money market funds/important money market funds, may continue to provide liquidity support or financing support (which is allowed under the CSRC regime).

In April 2025, the CSRC issued the Draft Fund Custody Business Measures, raising the entry barriers for custody business from the perspectives of substantive operation and compliance risk control capability. For example, for institutions newly applying for custody licenses, the minimum net asset requirement was increased from RMB 20 billion to RMB 50 billion for commercial banks and RMB 30 billion for securities companies and other financial institutions. Consistent with the Administrative Measures for Bank Custody Business, the Draft Fund Custody Business Measures also reinforce custodians’ responsibilities. For example, the reporting mechanism for material abnormal circumstances is improved, and the responsibilities of private fund custodians extend to the underlying investments²where the fund investments involve investing in other private products or other products of the same fund manager or its affiliates. We noted that the number of applications for fund custody licenses decreased, with some institutions voluntarily withdrawing their applications.

5. Regulatory initiatives to steer mid-to-long-term funds to the capital market

Consensus was reached on the importance of mid-to-long-term capital in maintaining the stable and healthy operation of the capital market and supporting the development of the real economy. In January 2025, the Office of the Central Financial Commission, jointly with five other departments, issued the Implementation Plan for Steering the Entry of Mid-to-Long-Term Funds into the Market  (“Implementation Plan”), providing a top-level design to remove bottlenecks and obstacles for the entry of mid-to-long-term funds into the market.

During 2025, specific measures centered on the ImplementationPlan were implemented to steer various fund types to invest in the capital market. For instance, the CSRC, the SSE and the SZSE revised the Administrative Measures for Securities Issuance and Underwriting  and its supporting rules, clarifying that bank wealth management and insurance asset management products are eligible for priority allotment in IPOs and granting them the same policy treatment as publicly offered funds. Separately, NFRA issued notices to raise the upper limit for investment by insurance funds in equity-type assets. Allocations to equity-type assets showed an upward trend in 2025, according to information provided by the regulator. Publicly offered funds were also guided to increase exposure to the market, with the relevant requirements in the Public Fund Action Plan and relevant rules, and some of the measures were achieved through regulatory intervention such as flexible adjustments to the pace of progress of fund registrations and launches. Whilst specific initiatives for other types of funds have yet to be passed, relevant departments have stated their intentions to improve the investment management policies for social security funds, basic pension funds, and enterprise (occupational) annuities in order to steer such funds to invest in the capital market.

6. NFRA aims to unify requirements for common issues across products

Previously, under the NFRA regime, requirements with respect to common issues, such as investor suitability management, were contained in disparate rules applicable to different types of asset management products, with no unified regulation. This resulted in inconsistent standards and even regulatory gaps. During the year, the NFRA issued the Administrative Measures for the Suitability Management of Products of Financial Institutions  and the Administrative Measures for Information Disclosure of Asset Management Products of Banking and Insurance Institutions, which unify the suitability management and information disclosure requirements applicable to products under the NFRA regime. The new regulations adhere to the principle of "identical standards for businesses of the same type", and unify the rules for issues common to multiple types of products, such as information disclosure. However, market positioning differs between products, which may lead to differences in the focus and content of information disclosed. The new regulations take into account the objective differences between various products and prescribe targeted measures for unique issues, including allowing self-regulatory organizations to issue specialized self-regulatory rules.

The framework established by the two new administrative measures is largely consistent with the rules under the CSRC system in areas such as classification of ordinary/professional investors, product risk levels, and information disclosure. However, differences exist for specific businesses and responsibilities. For instance, under the new regulations, distributors are required to take responsibility for information disclosure of asset management products of banking and insurance institutions, whereas under the CSRC regulatory system, they only need to disseminate information to investors and do not have the statutory responsibility of “information disclosure obligor”.

Separately, the NFRA issued the Administrative Measures for Commercial Banks' Agency Distribution Business  and the Administrative Measures for Bank CustodyBusiness  during the year, which regulate banks’ distribution and custody businesses and are expected to impact the services banks provide to the asset management business. For example, the Administrative Measures for Commercial Banks' Agency Distribution Business  clarify that the scope of products distributed by banks on an agency basis is limited to those issued by financial institutions. However, if a third party asset management product distributed by a bank invests in private funds or appoints a private fund manager as investment advisor, the bank is required to conduct due diligence review on the private funds or the private fund manager.

7. Increased depth and breadth of opening-up further connect with international markets

In 2025, the opening-up of the financial sector further deepened, primarily in the aspects of market access and policy improvements.

In terms of market access:

• Three foreign-invested insurance asset managers were approved to commence operations.
• The range of products available for trading by QFIs was further expanded. As at the end of 2025, there were 107 types of futures and options available for trading by QFIs.
• In addition to existing cross-border investment channels such as QFI, QFLP, Mutual Recognition of Funds, and Cross-boundary Wealth Management Connect, the pilot program for cross-border asset management in the Hainan Free Trade Port was officially launched, providing new options for offshore investors and expanding the categories of underlying assets available for investment.
• Hengqin and Macau established the "Hengqin-Macau Fund Connect" mechanism, under which eligible institutions can take advantage of simplified application procedures for QFLP pilot qualifications.

In terms of policy improvements:

• The most significant measure in 2025 was the QFI Work Plan, which revamped and simplified various QFI-related processes. The QFI Work Plan also clarified that licensed institutions may provide investment advisory services to QFIs, and addressed market concerns regarding short-swing trading by foreign public funds, algorithmic trading reporting, and total return swaps.
• The pilot system for QFLP quota management was further extended to multiple cities nationwide including Hefei, Changsha, Fuzhou, Xiamen, Suzhou, and Hengqin.
• Some cities also revamped their QDLP pilot systems. For instance, Shanghai introduced facilitative measures for its QDLP pilot policy, allowing Shanghai QDLPs to conduct cash management both onshore and offshore, permitting funds to be remitted offshore in batches, and looked into expanding fundraising in both local and foreign currencies.

8. Comprehensively strengthening investor protection

In 2025, the promulgation of new regulations in the asset management sector, coupled with the flexible approaches adopted by regulatory and judicial authorities in extreme risk cases, showed a thorough consideration of investor interests.

Regarding suitability management, the NFRA issued the Administrative Measures for the Suitability Management of Products of Financial Institutions, and the AMAC released the Detailed Rules for the Implementation of Investor Suitability Management for Publicly Offered Securities Investment Funds  (Draft for Public Comments). When promoting products, financial institutions are now required to conduct more detailed risk tolerance assessments and risk matching than before. On sales conduct regulation, the Administrative Measures for Commercial Banks' Agency Distribution Business  and the Rules for the Conduct of Sales of Publicly Offered Securities Investment Funds (Draft)  further regulate the behaviors of distributors and set clearer "red lines" by prohibiting misleading marketing and excessive/ bundled selling. On disclosure, the Administrative Measures for Information Disclosure of Asset Management Products of Banking and Insurance Institutions  unified the disclosure requirements for asset management trust products, wealth management products, and insurance asset management products and introduced disclosure requirements covering the entire product lifecycle. In addition, the public fund industry implemented a third phase of fee reduction, and pushed performance-based remuneration reforms to further align the interests of investors with those of managers of public funds. In the private fund sector, AMAC introduced a mechanism for replacing untraceable managers of private funds, which prevents such extreme events from obstructing the normal investment activities and exits.

In handling extreme risk events of asset management products, regulatory and judicial authorities are actively safeguarding investor interests to the greatest extent possible. Relying on the "case-by-case" model adopted by regulators for the risk disposal of trust companies, Sichuan Trust completed its reorganization in 2025, and Huaxin Trust introduced state-owned capital to acquire beneficial rights and was approved to enter bankruptcy proceedings. In judicial practice, where a private fund manager becomes untraceable or incapable, courts have recognized persons authorized by the general meeting of fund unit holders as eligible litigants, or subject to receiving adequate security, have permitted enforcement against fund assets in liquidation deadlocks.

2026 Regulatory Outlook and Trends

1. Regulators will lead reforms in the public fund industry

Based on the Public Fund Action Plan, we anticipate that there will be more new or revised regulations to be issued in the public fund industry, in areas including fund operations, distribution, investment, custody, special product types, as well as fund management companies’ corporate governance, personnel management, performance appraisal, risk reserves, etc.

The rule changes will guide the public fund industry in deepening reforms, reshaping industry positioning and underlying business logic, and facilitating, in accordance with investors’ best interests, industry objectives including serving the high-quality development of the real economy and capital markets. The rule changes will also have a significant impact on the asset management services industry. As an example, the new rules on benchmarking issued in January 2026 will on one hand help address issues such as frequent shifts in investment style, buying high and selling low. Together with improved disclosure requirements for public equity funds and floating management fee mechanisms, the new benchmarking rules will further assist investors in making investment decisions and align the interests of investors with fund management companies. On the other hand, the new rules will provide guidance for service providers such as custodians. For instance, the new rules on benchmarking will help resolve problems such as the lack of clear standards for assessing investment styles (as background, custodians are required to supervise investments by public funds to ensure they are consistent with the investment styles agreed in the fund contracts), and the difficulties faced by custodians in exercising effective supervision in this area in practice.

2. Government funding to support the development of the private fund industry

Both central and local governments have mentioned approaches to steering high-quality development of the private fund industry in various policy documents, with some localities already introducing specific implementation measures. Specifically considering the widespread fundraising difficulties and the key role of government funding in supporting the private fund industry, in January 2025, the General Office of the State Council issued the Guiding Opinions on Promoting High-Quality Development of Government Investment Funds  (“Guiding Opinions”). Although some provisions in the Guiding Opinions are merely “encouraged” and require further coordination among regulatory bodies, they at least indicate that the central government is paying attention to the relevant issues, some of which could be due to the stringent requirements raised by the government LPs, such as local investment or local incorporation requirements (usually, before or after local government make a capital commitment to a private fund, they would expect the fund to make investments to entities incorporated in the same locality, or expect the fund manager or the fund to be incorporated locally) or the potential crowding-out impact of social capital investment in private funds. We anticipate seeing new or revised rules on matters where the Guiding Opinions provide relatively clear guidance, for example, in controlling the number of government investment funds and clarifying tiered approval requirements for fund formation.

Separately, in light of the recently issuedWorking Measures for Strengthening Government Investment Fund Layout Planning and Guiding Investment Choice (Trial)andAdministrative Measures for Evaluating Investment Choices by Government Investment Funds (Trial), we anticipate that government/state-owned LPs will monitor pre-investment and post-investment management of investment choices more closely; for example, by setting requirements such as serving the real economy, supporting technological innovation and commercialization, making compliance one of the factors to be reviewed by the investment evaluation system, and guide funds to improve their investment allocations by implementing such evaluation at the pre-investment or post-investment stages.

3. Responding to market demands and further opening-up

To some extent, the QDLP program remains the preferred choice for many offshore asset managers to test the water in the onshore asset management market. Currently, the QDLP program faces challenges such as quota shortages in certain preferred cities, as well as the tightening or suspension of new registrations for QDLP managers. We anticipate that regulators may provide corresponding countermeasures based on market demands, such as by additional quotas to certain cities, special policies for the registration of QDLP managers, unified regulations regarding quota rules, etc.

With the implementation and enforcement of new regulations in recent years, we expect cross-border investment activities to become more active. Specifically, with the implementation of the Administrative Provisions on Hong Kong Mutual Recognition Funds, a broader range of Hong Kong funds with diverse investment geographies and product categories will be permitted for onshore distribution, providing Mainland residents with more choices. Regulations such as the QFI Work Plan and the Implementation Rules for the Pilot Cross-border Asset Management Business in the Hainan Free Trade Port  will increase the choices available to offshore investors for onshore investments.

In addition to the above, we anticipate schemes such as Swap Connect and Cross-boundary Wealth Management Connect to be further refined based on practical circumstances. There may also be more ETF Connect projects with more countries to steer the further opening-up of the Mainland financial market.

4. Increasing policy development in the wealth management sector and supporting asset managers’ specialized development

There is a consensus among regulators and in the industry that wealth management business holds immense demand and potential, and it is one of the paths which regulatory authorities encourage asset managers to use to reinvent themselves. The wave of market-oriented mergers and reorganizations among securities companies and fund companies has also created opportunities for some institutions to develop specialized wealth management business. There is room for further improvement to the existing regulatory regime in accordance with industry development needs. For instance, the current regulations for securities and futures investment advisory business are dated, and need to be updated in light of the industry's current status. Besides, fund investment advisory business remains a pilot scheme and a standardized framework is still needed. Legal basis or regulatory guidance for certain business, such as the QFI investment advisory service and trust companies’ wealth management trust business is still lacking. We anticipate that regulators will increase the development of policy in the wealth management sector. For example, formal regulations may be issued in areas where public comments have previously been solicited, such as securities and fund investment advisory business, fund investment advisory business, and family trust business.

For problem areas in the industry - such as variable quality, unsound internal control systems and frequent non-compliance of securities investment consultancies, as well as unclear positioning of family trust businesses and their conflation with asset management services - we expect regulatory authorities to strengthen compliance requirements in the form of new rules and clarify specific business standards and operational requirements for wealth management activities.

5. Further developing pension finance and improving the private pension system to alleviate practical issues

In 2025, regulatory authorities set forth the thinking and specific requirements for developing pension financial services in various regulatory documents. For instance, the NFRA proposed arrangements to expand the pilot program for pension wealth management products and improve product design. Similarly, the CSRC proposed measures such as incorporating eligible equity-based publicly offered funds (such as index funds) into the investment scope of private pensions, exploring the issuance of ABS and REITs with aged care facilities as underlying assets, supporting fund management companies in establishing subsidiaries specialized in pension financial services, and revising the rules for pensions-oriented fund products.

However, given the low level of public awareness, the private pension sector faces the typical problem of unfunded or low balance accounts. While the risk profile of pension products such as deposits or insurance is moderate, they contend with limited yields and limited liquidity. We anticipate that the private pension system will be further improved, such as by expanding product types to include those with higher expected returns. At the policy level, further refinements are possible, such as by establishing exit paths for a certain proportion of principal or returns, and special withdrawal mechanisms under extreme situations. Meanwhile, regulatory authorities will strengthen risk management from the perspectives of information and risk disclosures, and appraisal mechanisms based on specific business circumstances.

Footnotes

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