China Securities Regulator Drafting Rules to Regulate Fund Companies' Subsidiaries

China's securities regulator said on Friday that it has drafted rules to strengthen oversight of fund companies' subsidiaries, a business that has grown to 9.84 trillion yuan ($1.50 trillion) and has raised concerns about potential financial risks in some cases.

The China Securities Regulatory Commission said on its official micro blog that it has recently conducted health checks on the relevant subsidiaries, and found some companies have expanded "blindly", with short-term incentives, and little capital restraint.

Reuters reported earlier this week that regulators will raise the thresholds for fund houses to establish subsidiaries and use capital ratios to limit the subsidiaries' ability to expand.

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Samuel Shen is a correspondent at Reuters in Shanghai.