Regulatory Studies On Structured Financial Products Of Foreign Banks In China

In China, the wealth management business was initially established fromthis century. The parent bank of foreign banks in China already carried outthis business as early as in the last century. Foreign banks in China slowlybegan to develop their wealth management business from China’s accession tothe WTO. Although the proportion of financial products issued by foreignbanks to the total amount of the entire banking industry is not very high, theyare the main distributors of the structured financial products in China. Thisthesis will focus on these structured financial products issued by foreignbanks in China.This article first introduces the concept of the wealth managementbusiness and two main categories in China. Each segment of the structuredfinancial products and their product features are introduced one by one, withtheir market shares in foreign banks. Secondly, the article deeply analyzes thesales and product design of structured financial products in foreign banks.Through a complaint case in this field, the article reveals several major andwidespread problems in the process of design and sales of structured financialproducts in foreign banks. How to resolve these difficult issues is the essenceof this article. The article introduces some overseas experience in structuredfinancial products regulatory aspects and lessons learned, and a new conceptof conduct regulation, which mainly focuses on the protection of the interestsof financial consumers. Under the guidance of this new model, the article putsforward a number of ideas and proposals to deal with the previously revealed problems, in order to provide fair and transparent financial services for thecustomers of the sophisticated and high-end structured financial products.The research on structured financial products in the country is still in itsinfancy with little literature. The articles discussed sales, product design andregulatory approach for structured financial products of foreign banks inChina are even more extremely rare. Innovation of this paper is tosystematically analyze structured financial products, to introduce the maturedoverseas experience and to recommend transferring from single mode (i.e.prudential supervision) to dual mode (conduct regulation and prudentialsupervision). The article also provides many specific operationalrecommendations for the reference of the relevant regulatory authorities.