Private Equity Funds Should Be Targeted At A Line Of Supervision.

In view of the risks existing in the development of private equity funds and the next stage of supervision, Chen Ziqiang, director of the supervision department of the private equity fund of the SFC, said that the current regulation of private equity funds follows the basic principles of "unified supervision, functional supervision, moderate supervision and classified supervision".

"The rapid development of the private equity industry in recent two years has also brought a lot of risks."

Chen Ziqiang pointed out that, first, it is in disguised form of public offering to break through the standards of qualified investors, such as publicity and recommendation to non specific objects, investors in excess of the quorum limit, the use of capital subscription system or the split of sales rights to reduce the threshold of investors, exaggerate publicity, violate regulations and protect capital gains, and so on. Two, management anomie and illegal operation.

Many private institutions have internal management and wind control system is not perfect, fund operation is arbitrary, some private fund practitioners still exist manipulation of the market, insider trading and other acts; three, the registration and record information is distorted, and compliance awareness is weak.

Some private institutions disclose information to investors and regulators not enough. They do not cooperate with regulators or self-discipline checks, or even refuse to circumvent supervision. Four, the pressure of "famous stocks and real debt" products is high, and "run away" incidents occur frequently.

Chen Ziqiang stressed that the outstanding problem of the private equity industry is also manifested in the risk of illegal fund-raising.

A statistics show that the private fund illegal fund-raising risk incident occurred in the first quarter of 2016 involved in the record fund of 573 million yuan, involving 1774 investors.

Although the scale of funds involved has decreased, the trend of illegal fund-raising has not yet been reversed.

The risk of illegal fund-raising for private placement funds not recorded is more serious, which not only disrupted the normal market order, damaged the reputation of the industry, but also caused huge economic losses to investors.

In this regard, Chen Ziqiang detailed the next step in the supervision of the private sector regulation of the SFC.

Among them, the basic principles of "unified supervision, functional supervision, moderate supervision and classified supervision" should be carried out according to the path of "good quality and bad quality" and "differentiated supervision".

Specifically, functional regulation is the private equity fund business under different institutional lines. In view of its identical functional attributes, a unified functional regulation is implemented.

All types of private equity funds should comply with the standard of qualified investors.

And other regulatory requirements to prevent regulatory arbitrage.

At present, the SFC has explored the implementation of the unified function supervision of private equity funds for securities companies, fund management companies, Futures Company and their subsidiaries.

In terms of "bad quality",

Through organizing on-site inspections and coordinating with local governments to fight illegal activities, we should investigate and deal with industry's illegal and illegal activities, publicize the organizations that have lost contact with them, revoke managers' registration for illegal organizations, and cancel the registration of institutions that have long been unemployed.

In terms of differentiated regulation, the association of pre fund associations has conducted differentiated self-discipline exploration on the scope of the qualification examination, the content and frequency of information disclosure, the qualification requirements of the trustee institutions, and the guidelines for contracts, etc., but the related differentiated institutional arrangements still need further improvement and improvement.

Chen Ziqiang said, for example, in the field of post risk monitoring, securities funds will mainly focus on their leverage, whether they are suspected of insider trading or manipulating the market. For equity funds, they will mainly focus on the situation of capital raising compliance and conflict of interests.

In consideration of

There is already a certain basis for self-discipline management, which can give full play to the role of equity and venture capital associations, and cooperate in examinations, training, credit system construction and best practices in the industry.

Moderate regulation is that private equity funds do not have administrative approval, and carry out ex post supervision, giving full play to the constraints of investors and markets on private fund managers and the self constraint of private fund managers.

Industry regulation and self regulatory supervision mainly start from capital raising, investment operation and information disclosure.

Classified supervision is on the basis of unified legislation and unified registration and record, according to the different investment targets of private equity funds, the private equity funds, private equity funds and venture capital funds are put on record respectively, and different regulatory requirements are put forward.

At the same time, according to the dimensions of the management of private equity funds, the number of investors, the degree of compliance risks, complaints and reports, we should classify and monitor the problems and risks.

Chen Ziqiang pointed out that the Commission will create conditions to encourage excellent institutions to be bigger and stronger, while clearing up violations, loss of links and shell organizations.

The encouraging policies are mainly embodied in 6 aspects: first, allowing eligible private institutions to apply for public fund managers' business licences; the two is to allow eligible private institutions to open accounts in the interbank bond market; three, to study and clarify the listing of private institutions in the new third board as soon as possible; four, to promote the long-term investment of insurance funds and other eligible venture capital funds; five, to support conditional private equity organizations to carry out overseas investment business; six, through classified publicity, launching the best practices in the industry, and publicizing excellent private institutions.