Key facts
- Distressed-debt managers ordered to stop acting as conduits for outside investors.
- Regulators began issuing informal instructions in late June.
- Chongqing Fucheng Asset Management Co. ordered to suspend operations on July 24.
Chinese regulators have instructed distressed-debt managers to cease acting as conduits for outside investors, tightening enforcement of a decade-old ban. This move threatens the business model of some regional asset management companies. Industry sources indicated that regulators began issuing informal instructions to halt this business in late June. On July 24, Chongqing's local financial regulator disclosed that it had ordered Chongqing Fucheng Asset Management Co. to suspend operations for rectification, citing the company's practice of effectively lending or renting out its financial business license.