After the company was named by the supervisor, the person in charge of relevant business is also to blame.
On April 14, the Beijing securities regulatory bureau announced that Feng Ping, the executive director of China International Capital Corporation Limited(601995) asset management department, who was directly responsible, was required to accept the regulatory interview due to the two problems of China International Capital Corporation Limited(601995) that “there are inconsistencies in the valuation techniques adopted for the same investment variety with the same characteristics” and “using the cost method to value some assets in the private placement asset management plan”.
With the recent continuous improvement of the scale of asset management and private placement of securities companies, regulators pay special attention to the valuation of related products, and many regulatory bureaus have successively issued fines and prompted risks. For example, Shenzhen Securities Regulatory Bureau requires that all institutions should attach great importance to product valuation management, effectively improve compliance awareness and improve the internal control mechanism of valuation management.
supervision interview with the executive director of asset management department
Beijing securities regulatory bureau pointed out that China International Capital Corporation Limited(601995) has two problems: one is that the valuation techniques adopted for the same investment variety with the same characteristics are inconsistent; the other is to use the cost method to value some assets in the private placement asset management plan.
The above situation violates the provisions of paragraph 2 of Article 1 and paragraph 2 of Article 2 of the guiding opinions of China Securities Regulatory Commission on the valuation business of securities investment funds and paragraph 1 of Article 34 of the provisions on the operation and management of private asset management plans of securities and futures operating institutions. Feng Ping, as the executive director of China International Capital Corporation Limited(601995) asset management department, is directly responsible for this. Based on this, the Beijing Securities Regulatory Bureau asked Feng Ping to bring a valid ID card to the Beijing Securities Regulatory Bureau for regulatory talks.
In September 2017, the CSRC issued the guidance of the CSRC on the valuation business of securities investment funds to regulate matters related to the valuation business of funds and the valuation of net value of shares. According to the guiding opinions, the fund manager shall maintain the consistency of valuation procedures and techniques when valuing investment varieties. The valuation principles, procedures and techniques of the same investment variety with the same characteristics held by the same fund manager for different funds under management shall be consistent (except for special varieties stipulated by the CSRC).
For investment varieties that do not have an active market, the fair value shall be determined by using valuation techniques applicable in the current situation and supported by sufficient available data and other information. When using valuation technology to determine the fair value, the observable input value shall be used preferentially. The unobservable input value can be used only when the observable input value of relevant assets or liabilities cannot be obtained or it is impractical to obtain.
In addition, according to the provisions on the operation and management of private placement asset management plan of securities and futures operating institutions, securities and futures operating institutions shall regularly evaluate the implementation effect of asset management plan valuation, and adjust and improve it when necessary to ensure fairness and rationality. When there is sufficient evidence that the measurement method of the assets related to the asset management plan can no longer truly and fairly reflect its value, the securities and futures operating institution shall negotiate with the custodian and timely adjust the net asset value of the asset management plan by using the fair value measurement method.
It is worth mentioning that in November 2021, Beijing Securities Regulatory Bureau has held China International Capital Corporation Limited(601995) accountable for the same issue. At that time, Beijing Securities Regulatory Bureau ordered China International Capital Corporation Limited(601995) to take administrative regulatory measures to correct, required China International Capital Corporation Limited(601995) to rectify and submit a rectification report within two months.
asset management business ranking by leaps and bounds
In addition to the problems, China International Capital Corporation Limited(601995) recently, the asset management business has shown a trend of rapid development, which has attracted the attention of the industry.
In February this year, CCBA updated the average monthly scale data of various asset management businesses in the fourth quarter of 2021. In the list of “top 20 securities companies with the monthly average scale of assets actively managed by private placement”, China International Capital Corporation Limited(601995) ranked second with the monthly average scale of 857548 billion yuan, only lower than Citic Securities Company Limited(600030) the monthly average scale of 1046253 billion yuanP align = “center” the top 20 securities companies in terms of monthly average size of assets under active private management:
In terms of the overall business of asset management, the annual report of China International Capital Corporation Limited(601995) 2021 shows that as of December 31, 2021, the business scale of China International Capital Corporation Limited(601995) asset management department was 1128347 billion yuan, an increase of 120.0% over the end of 2020. In terms of product categories, the management scale of collective asset management plan and single asset management plan is 568321 billion yuan and 560026 billion yuan respectively. There are 747 managed products, an increase of 24.9% over the end of 2020.
In terms of business income, 601 in 19952021, the operating income of asset management sector was 1.415 billion yuan, with a year-on-year increase of 20.26%; The operating profit margin was 36.86%, an increase of 3.85 percentage points over the previous year. Although there is still a gap between the overall business data and investment banking, stock business, wealth management and other sectors, the asset management business of China International Capital Corporation Limited(601995) is commendable under the background of the general downturn in the asset management industry of securities companies after the new regulations on asset management.
In addition, China International Capital Corporation Limited(601995) 2021 annual report shows that China International Capital Corporation Limited(601995) appointed Xu Yi as the assistant to the president and the head of the asset management sector of the company in March 2020, and said that “since Mr. Xu served as the head of the asset management sector, the company’s asset management business has made significant development, the industry ranking has jumped from No. 10 to No. 2 in two years, and the market image has been significantly improved”.
private placement product valuation problems occur frequently
China International Capital Corporation Limited(601995) this time, the valuation of private placement products named by the supervision is not an isolated case. Only from the recent situation, there are not a few securities companies that have been supervised and issued Administrative Supervision Measures due to similar problems.
In March this year, Shanghai Securities Regulatory Bureau issued a ticket to China Thailand asset management. It is mentioned that “individual asset management plans of the company still use the historical closing price valuation for a long time when the bidding trading of the invested bonds has stopped, and the valuation method is unreasonable”. Shanghai Securities Regulatory Bureau ordered China Thailand asset management to make corrections and submit a written report, and issued a warning letter to Xu Jiandong, the general manager and member of the Valuation Committee of the company, and Wang Hongyi, the compliance director and member of the Valuation Committee of the company.
In February this year, the information released by Beijing Securities Regulatory Bureau showed that Dongxing Securities Corporation Limited(601198) private placement asset management business had problems such as “the implementation of new asset management regulations is not in place, the performance remuneration of individual products is withdrawn more than once every six months”, “investment management is not standardized, the valuation of defaulted bonds of individual products is not adjusted in time”, “there is no clear requirement to regularly evaluate the implementation effect of valuation policies and procedures of collective plan”, etc. Beijing Securities Regulatory Bureau issued a warning letter to Dongxing Securities Corporation Limited(601198) and asked it to effectively improve the compliance risk control level of private equity asset management business and put an end to such matters.
In December 2021, Zheshang asset management was required by Zhejiang securities regulatory bureau to carry out comprehensive and in-depth rectification of asset management business and suspend the filing of private asset management products for 6 months due to “inconsistent valuation techniques adopted for the same investment variety”, “unreasonable valuation of default assets held by products, failure to disclose information to investors as required, and continuous development, subscription and redemption of some collective products”.
In November 2021, Shanghai Securities Regulatory Bureau decided to issue a warning letter to Shenwan Hongyuan Group Co.Ltd(000166) securities, which also included the valuation problem: “there are situations where different valuation methods are used for similar assets held in different private asset management plans, and individual private asset management plans do not strictly abide by the principle of fair valuation, and the valuation method is unreasonable”.
It is not difficult to find that the recent regulation has paid special attention to the valuation of private asset management of securities companies, which is related to the improvement of the scale of active management of private asset management of securities companies. According to the data of China Foundation Association, in the fourth quarter of 2021, the total scale of the top 20 securities companies in the monthly average scale of private placement assets actively managed by securities companies reached 5.21 trillion yuan, an increase of more than 50% compared with the fourth quarter of 2020.
Why did the valuation of private placement products repeatedly trigger regulatory fines? In this regard, insiders told fund Jun that the growth of private asset management scale of securities companies is inseparable from the development of institutional business. Some institutional customers have inconsistent understanding with securities companies in terms of valuation, and will also put forward corresponding opinions and requirements. Of course, this is not an excuse for its violations. Securities companies “named” should actively rectify in accordance with regulatory requirements.
In January this year, the Shenzhen Securities Regulatory Bureau issued a risk warning on the valuation management of asset management products in the first issue of securities and futures institutions supervision communication in 2022. Shenzhen securities regulatory bureau pointed out that in the daily supervision, it is concerned that the valuation management of the private asset management plan managed by some institutions is not in place in the process of investing in private bonds: first, the fair valuation of the private asset management plan is not carried out in accordance with the requirements of net worth management; Second, different valuation methods are adopted for similar assets held by different products, which violates the provisions of relevant laws and regulations on valuation consistency.
Shenzhen Securities Regulatory Bureau said that all institutions should attach great importance to product valuation management:
First, improve compliance awareness, strictly implement the requirements of relevant laws and regulations such as the measures for the administration of private asset management business of securities and futures institutions and the provisions on the operation and management of private asset management plan of securities and futures institutions, adhere to the principle of fair value measurement and strictly restrict the use of cost method.
Second, improve the internal control mechanism of valuation management and establish a regular review and review mechanism on the consistency of product valuation to ensure that there are no major defects in valuation procedures and technology.
Third, when using valuation technology to determine the fair value, we should give priority to the use of observable input value. Only when the observable input value of relevant assets or liabilities cannot be obtained or it is impractical to obtain, can we use unobservable input value.
