On October 31, 2025, the National Administration of Financial Regulation (NAFR) issued the Measures for the Administration of Asset Management Trusts (for Consultation) (the Consultation Paper). Since the release in 2018 of the Guiding Opinions on Regulating Asset Management Business of Financial Institutions (the Opinions), implementation rules have been made respectively for various asset management sectors such as public fund management, private asset management and bank wealth management. However, specific implementation rules for asset management-type trust products have long been absent. The Consultation Paper aims to fill this regulatory gap, clarify the classification criteria for the different types of trust business, and lay a foundation for the regulation of asset management-type trust businesses.
Currently, commercial banks remain the primary channel for financial product sales in China and offer a broad range of distributable products including public funds, bank wealth management products, private asset management products, insurance asset management products, and trust plans. For example, private fund managers are seeking cooperation with commercial banks, hoping to access the banks’ high-net-worth clients, via the latter’s distribution networks. However, since private fund managers are not licensed financial institutions themselves, banks are currently prohibited from directly distributing private fund products. In practice, commercial banks typically distribute asset management products issued by licensed financial institutions; these products then invest in private funds through ‘nesting’ or ‘targeted investment’ approaches, allowing bank clients to indirectly participate in private fund investments by investing in such financial products. In this structure, a typical ‘wrapper’ for upper-tier private fund investors is trust plan. Although the Administrative Measures for the Agency Distribution Businesses of Commercial Banks issued in March 2025 raised higher qualification requirements for private fund managers under this structure, our observations indicate that this remains one of the primary fund-raising channels for private fund managers. As such, the release of the Consultation Paper is expected to impact the private fund industry significantly. This article analyzes the key provisions in the Consultation Paper from the perspective of private fund managers, and how the provisions may affect their fund-raising.
I.Clarifying the Legal Relationship and the Nature of Trust Plans
The Consultation Paper primarily applies to the category of ‘asset management trusts.’ An asset management trust refers to a trust plan whereby a trust company raises funds from two or more entrusting parties in its own name, with the core objective of providing investment management services. This type of trust is typically a self-benefiting trust, where the entrusting party and beneficiary are the same party, and the trust company, as trustee, fulfills the investment and management obligations. This definition further clarifies the legal relationship and business attributes of collectively fund-raised trust plans, thereby placing them under the same regulatory framework as other asset management products (e.g., public funds, private asset management products and bank wealth management products) within the unified regulatory framework.
From the perspective of regulatory intent, the Consultation Paper incorporates collectively fund-raised trust products into the broader asset management product system, refining the positioning of trust companies’ asset management business. This helps unify the regulatory standards, while providing a clear legal basis for trust companies to conduct asset management business in the future.
II.Qualified Investor Standards Align with the Opinions
Article 8 of the Consultation Paper states that asset management trust products are to be issued to qualified investors on a non-public basis and sets the requirements for qualified investors’ financial status, investment experience and types of institution.
This provision aligns with the qualified investor standards outlined in the Opinions. Article 8 retains the Opinions’ dual requirements for investors’ risk tolerance capacity and asset size, while expanding the scope of qualified investors to include natural persons, legal entities and specific institutions (e.g., pension funds, charitable funds and asset management products issued by regulated institutions, as well as asset service trusts and public welfare/charitable trusts). From a regulatory coordination perspective, trust plans that align their investor standards with those of other asset management products (e.g., public funds, private asset management products and bank wealth management products) help establish a unified investor onboarding and risk-matching mechanism, preventing arbitrage caused by inconsistent regulatory standards across different types of asset management product.
III.New Requirements for Investor Concentration
Article 9 of the Consultation Paper introduces investor concentration limits to asset management-type trust business for the first time, specifying caps on the proportion of a single investor’s investment in the same trust product. Specifically, a single investor’s investment shall not exceed 50% of the trust product’s paid-in capital size and the total investment of a single institutional investor and its affiliated parties shall not exceed 80% of the product’s paid-in capital. Additionally, if products managed by the same asset management product manager invest in open-end trust products involving non-standard assets, their aggregated investments shall not exceed 50% of the trust product’s paid-in capital size.
From a funding source perspective, these new concentration limits will directly constrain the composition of investors in trust plan fundraisings. In the past, some trust plans have adopted a ‘quasi-targeted’ structure, which was funded by a single or small number of institutional investors. This provision will render such concentrated investment structure unsustainable, requiring trust plans to onboard more qualified investors to diversify investment proportions, thus potentially prolonging fundraising and increasing costs. It will also impact private fund managers’ fund-raising arrangements that rely on trust intermediary.
This provision tightens regulatory restrictions on ‘single funding source’ trust structures, aiming to prevent situations wherein a single large investor dominates the investment decisions of a trust plan. It will drive trust plans to adopt diversified fund sources.
IV.Clarifying Standards for Upward See-through for the Aggregation of the Number of Investors
Article 10 of the Consultation Paper clarifies, for the first time, the standards for see-through identification and aggregate calculation when a trust product accepts investments from other asset management products, i.e., when a see-through calculation of the number of investors in upper-tier products is required. This provision refines regulatory requirements for ‘nested investment’ structures in trust products.
From a regulatory logic perspective, Article 10 distinguishes between two scenarios:
General Scenario: When a trust product receives investments from other asset management products (e.g. public funds, private asset management products or bank wealth management products), the trust company is not required to calculate the number of investors of the upper-tier products in aggregate, provided that it can identify the underlying investors and fund sources through see-through identification, and the upper-tier product managers have already conducted due diligence on investor eligibility and fund sources.
Exceptional Scenario: If a trust product accepts investments from another trust product, and the upper-tier trust product’s investment proportion in this trust product exceeds 25% of its own paid-in capital size, the trust company must conduct a see-through identification of the investor qualifications of the upper-tier trust product and calculate the number of investors in aggregate. The aggregate number of investors shall still not exceed 200.
V.Clarifying the 25% Portfolio Investment Requirement
Article 48 of the Consultation Paper stipulates that a single trust product’s investment in the same asset management product shall not exceed 25% of its paid-in trust capital.
Once this provision takes effect, the existing business collaboration model wherein a trust plan invests in a single private fund (such as a securities-type private fund or QDLP fund) through pooled funds from high-net-worth private banking clients will no longer be feasible. This will inevitably impact private fund managers’ fund-raising through the intermediary of trust plans.
Unlike the ‘dual 25%’ requirements in the Opinions and the Guidelines for the Operation of Private Securities Investment Funds, the Consultation Paper only specifies the first 25% limit (i.e., per-trust product investment in a single asset) and does not restrict a trust company from investing in multiple trust products managed by it in the same asset or asset management product. Article 59 of the Consultation Paper stipulates that the total investment in the same asset by all trust products managed by a single trust company shall not exceed RMB 30 billion. This is consistent with the Opinions. In theory, private fund managers may still potentially collaborate with the same trust company for a single private fund product, provided that the 25% upper limit applies either at the level of the trust product or at the level of the underlying private fund. The way to adapt these requirements by making changes to the current business collaboration model remains to be seen as a matter of practice.
VI.Private Fund Managers Cooperating with Trust Plans Must Satisfy Certain Qualifications
Article 54 of the Consultation Paper sets clear onboarding qualification and compliance requirements for institutions that trust companies select and cooperate with (investment cooperative partners) and imposes professional experience requirements for private fund managers acting as investment cooperative partners. This provision signals that regulators will further strengthen trust companies’ fiduciary obligations and compliance responsibilities when collaborating with external private fund managers on asset management business, with potentially significant impact on the structure and business practice of trust plans investing in private funds.
Under Article 54, investment cooperative partners for trust products include (but are not limited to): (1) Issuers of asset management products invested in by the trust product (e.g., private fund managers); and (2) Investment advisors involved in trust investment management. These institutions must hold legal qualifications and be supervised by financial regulatory authorities to ensure compliant investment activities and controllable risks.
For a private fund manager to cooperate with a trust plan (if the trust product invests in the manager’s private fund, or the manager serves as the trust’s investment advisor), the manager needs to have been registered with the Asset Management Association of China (AMAC) for at least a year, with no material illegal or non-compliant records. For a securities-type private investment fund manager, they shall have at least three consecutive years of verifiable securities and futures investment management track record and employ no fewer than three investment management personnel with no adverse professional records. Under the current regulation and practice, the ‘3+3’ requirement (i.e., a track record of three years + three qualified personnel) only applies in circumstances where a securities-type private fund manager provides investment advisory services to a trust plan. However, according to the Consultation Paper, this requirement will be extended to any securities-type private fund manager collaborating with a trust company, e.g., a securities-type private fund managed by it is invested by a trust plan. If a securities-type private fund manager fails to meet the ‘3+3’ requirement, trust plans will no longer be a viable fund-raising option. This provision significantly raises the bar for private fund managers to raise funds via a trust intermediary.
Our Proposed Amendments to Consultation Paper
For the private fund industry, adapting to the challenges posed by the Consultation Paper for fund distribution will be essential, particularly for foreign-invested securities-type private fund managers and QDLP managers. Please refer to the separately attached document for our proposed amendments to the Consultation Paper.
Proposed Amendments to the Measures for the Administration of Asset Management Trusts (Consultation Paper)
Overall Opinion: We believe that the main purpose of the Measures for the Administration of Asset Management Trusts is to strengthen regulation, prevent risks and promote the healthy development of asset management-type trust business. For trust companies and private fund managers (particularly foreign-owned securities type private fund managers and QDLP managers acting as onshore feeder funds investing in overseas master funds) that have conducted business cooperation in compliance with the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions (Yin Fa No. 106 [2018]) (‘Guiding Opinion on Asset Management’), the associated risks are controllable. This business helps attract foreign asset management firms to establish a presence in China and contributes to the development of Shanghai as an international financial center. Therefore, we believe that the new Measures for the Administration of Asset Management Trusts provide sufficient protection for normal business activities, rather than impose unusual restrictions beyond the framework of the Guiding Opinions on Asset Management, to maintain the stability and sustainability of these business operations and preserve and promote the development of wealth management and cross-border businesses. Articles 48 and 54 have drawn objections from foreign asset management firms, and we advise regulators to carefully consider the reasonableness and necessity of the provisions when finalizing the Measures for the Administration of Asset Management Trusts and minimize the impact on normal business activities.
