The Guaranteed Fund Was Eventually Shut Out By The SFC.

In response to recent rumors that regulators have suspended applications for guaranteed funds, a spokesman for the securities and Futures Commission, Deng Ge, said that since 2015, the number of guaranteed funds has greatly increased and the scale of management has increased rapidly.

In the guiding opinions on the capital preservation fund (SFC Announcement No. 2010] 30, two kinds of guarantee mechanism were proposed: joint liability guarantee and buyout guarantee.

The regulatory authorities have noted that the current guaranteed fund products have adopted joint and several liability guarantees, and most of them require the guarantor to have an unconditional recourse clause.

Such a guaranteed guarantee arrangement will bear the ultimate possible risk loss from the fund company, which is not compatible with the capital system of the fund company. It may damage the interests of the fund holders and may jeopardize the fund company system. The potential risks can not be ignored.

Based on the above considerations, the regulatory authorities will make up for institutional deficiencies as soon as possible.

This is almost the same as the previous market rumors. Joint liability insurance is also known as the counter guarantee in the industry. Fund companies will also bind to take risks. Once the market falls, this risk will eventually be directly directed at the fund company.

From the view of the development of the domestic insurance fund, there has not been a non - cost - saving situation, even there are

It is pointed out that the weighted average yield of guaranteed funds has exceeded 15% in recent two years.

This has also led to the hot selling of guaranteed funds. The poorer the market, the more popular the guaranteed fund is.

It should not be underestimated. The frequent occurrence of default in the bond market makes it impossible for the guaranteed fund to find a qualified target when constructing a safety pad. It is very likely that there will be a loss.

Of course, as a small leek that "wildfires can't burn in spring," no matter who is responsible for the guarantee, as long as my products can be guaranteed, the market is going down so that it can keep capital and have the opportunity to achieve excess returns.

Data show that as of May 13th, 20 of the 147 guaranteed funds fell below 1 yuan, which are facing two situations. One is the quick liquidation of equity allocation as far as possible.

To buy a better credit bond index as soon as possible to return to the par and then operate; two is to increase the allocation of interests as soon as possible.

In this way, the former tends to gain a small profit over a long period of time, and the latter is more likely to increase risks. No matter how it is perceived, the possibility that investors will get excess returns through guaranteed funds will shrink.

So in the case of counter guarantee, the fund company is the first payer, and who can say that such a situation will not happen in the current market?

Of course, regulators will not sit on such a situation. After all, it will be a series of reactions. According to the size of the current market guaranteed fund exceeding 200 billion yuan, any fund company will be injured if there is a breach of contract.

However, the SFC did not kill a single stick. Deng Ge said that the application for registration of joint and several liability guarantee means guaranteed fund products. Fund companies must make stress tests ahead of time, properly arrange the final risk taking mechanism, fulfill the obligations of trustees, and protect the legitimate rights and interests of fund holders.

In the case of guaranteed fund products that use buyout guarantees, the fund companies can apply for registration on the basis of fully assessing the risks and reasonably calculating the affordability of risks.

However, the fund manager learned from several fund companies that there is a rare buyout fund in the market. "After all, the fund company is in a weak position in the cooperation, and the guarantee institution has no need to drag itself down."

For the fund companies, if the SFC is strong enough, will it soon become hard? Maybe it will take some time for the fund companies to get used to it.