Finance: Firms to establish risk reserve
(Shanghai Daily)
Updated: 2006-08-21 16:03
The securities regulator has ordered fund management firms to set aside at
least 5 percent of their monthly income from fund management toward a risk
reserve to protect investors' interests, the Financial News reported Friday.
Firms should put money into their individual reserve until the amount reaches
1 percent of their net assets under management, the paper cited a China
Securities Regulatory Commission announcement as saying. Each firm's reserve
will be held in a special account with its custodian bank, the report said. The
reserves would mainly be used to cover any losses originating from violations of
laws or contracts, technical defaults or inappropriate operation, it
said.
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