Financial pan-asset management in a changing legal environment

China’s Trust Law was implemented on 1 October 2001. In the subsequent 10 years, the China Banking Regulatory Commission (CBRC) issued a series of rules and regulations that have provided a sound legal basis for the acceptance by trust companies of property entrusted by clients, based on the unique system arrangement that is a trust, and the management or disposal of such assets in their own names.

The management of trust property by trust companies remains the most important component of the asset management market. Publicly available data show that, as at the end of 2013, trust assets managed by trust companies totalled RMB12 trillion (US$1.95 trillion), occupying the top spot for the amount of assets managed in the market.

Leading position

The flexibility of asset management by trust companies continues to place it in a leading position; trust property can take the form of debt investments such as trust loans, interbank deposits, reverse repossessions, lease financing, etc., or alternatively take the form of equity investments such as equity investment, securities investment, investment in physical goods and investment in various types of property rights. Furthermore, on financial markets, they may be allocated to standard financial instruments and non-standard financial wealth management products, and on physical property markets, allocated to a great variety of assets.

Lawrence Lu is a senior partner and head of the financial securities practice group, and Huang Ying is the executive director of the finance & securities department and the banking & structured financing practice, at SG & CO PRC Lawyers; Raymond Liu, the senior director of the asset securitisation practice at SG & CO, co-authored this article