Research on Implementation Mechanism of China’s Financial Stability Law in the Asset Management Industry

Abstract

Currently, the asset management industry is still facing hidden systemic risks such as “shadow banking”, multi-layer nesting and rigid redemption in the process of gradual standardization. Therefore, as a fundamental law for the prevention of financial risks in China, the FSL is of great significance to the healthy development of the asset management industry by systematically building a new pattern of financial stability and strengthening the framework system for early-warning, prevention, resolution and disposal of financial risks. The formulation and implementation of the FSL should always adhere to the two principles, one is improving the legal norm system in the asset management industry, and the other is the market-resolution-first principle for risk mitigation. Only in this way can scientific legislation be achieved. Based on this as a standard, the current institutional framework of the FSL still needs to be improved in the regulation of the asset management industry. Firstly, the coordination of the legislative system is insufficient, and there are institutional conflicts with China’s Company Law and China’s Enterprise Bankruptcy Law, etc., which highlights the problems of procedural convergence and supporting system design. Secondly, the protection mechanism for the investors of asset management business is weak. The existing legal positioning and regulatory standards are not clear enough, and the mechanism for right protection is still unsound. Thirdly, the response to digital risks is lagging behind, and there is a lack of targeted regulations on algorithm-driven businesses such as smart investment advisors and quantitative trading. These issues need to be addressed and strengthened. In order to optimize the implementation efficiency of the FSL, it is not only necessary to start with the collaborative optimization of internal and external systems to achieve coordination in the content of laws and regulations, but also necessary to accelerate the construction of supporting mechanisms from the aspects such as financial risk early-warning and financial protection funds in the asset management industry. With the deepening implementation of the FSL and the continuous improvement of supporting mechanisms, the asset management industry will gradually advance towards a more standardized and transparent development track. In the future, it is necessary to further study the path of rule of law, coordinate risk prevention and market innovation, achieve a benign interaction between financial stability and the development of real economy, and lay a solid foundation for building a more resilient modern financial system. Under the protection of the rule of law, the asset management industry will become an important force in serving the real economy and promoting common prosperity.