New rules for China's wealth management sector lay groundwork for big changes

New plans unveiled by China's regulators send a clear signal about the future direction of China's booming wealth management sector and the government's desire to regulate China's shadow banking market.

China's banking regulator, China Banking Regulatory Commission (CBRC), released its Administrative Measures on the Sales of Wealth Management Product by the Commercial Banks (the Measures) on 9 October 2011, with an effective date of 1 January 2012.

The release of the Measures is not a surprise. In an earlier Client Alert ( A quiet revolution in China's financial markets), we noted that China's regulators had started to acknowledge publicly the importance of non-mainstream finance and, implicitly, the need to introduce new rules to regulate it.