Investors will soon get access to low-risk commercial paper as draft rules await final approval from the regulators
China's first money market fund will be launched by the end of December, increasing the limited number of low-risk fund products available to mainland investors stuck in a protracted bear market.
According to draft regulations seen by the South China Morning Post, the launch is expected to open the commercial bill market - until now reserved for commercial banks - to mainland fund houses that have long been fettered by the lack of investment instruments and the strict demarcation separating China's banking and securities industries.
The draft rules will also allow money market funds to park their capital in time deposits, certificates of deposit, short-term bonds with less than 397 days to maturity, bond repurchases of less than a year, central bank bills and bank bills.
The first money market fund was expected as early as next month pending final China Securities Regulatory Commission (CSRC) approvals and support from the China Banking Regulatory Commission (CBRC), a market source said.
Money market funds are open-ended and invest in high-liquidity, low-risk money market instruments - such as certificates of deposit, commercial paper and short-term bonds. Traded on secondary markets and allowing continuous redemption with low fees, they are considered a higher-yield alternative to bank deposits.