Study On The Risk Supervision System Of Yuebao Class Monetary Fund

Money Market Fund as a cash management tool, which invests in interbank deposit, short-term bonds, bond buy backs and other money market instruments, has features of capital and liquidity and good safety, favored by the majority of investors. With the combination of the Internet platform and money market funds, there has been Yuebao, WeChat wealth management, SuNing lingqianbao and other Internet financial products appeared. They take the third party payment institutions as the fund company’s money market fund direct sales platform on the Internet, and complete the sale of fund shares and the related payment and settlement in the sales process through the Internet channel, providing new financial channels for the medium and small investors. However, in extreme market conditions, Yuebao class monetary fund will face market risk, credit risk, liquidity risk and even systemic risk which caused by the money market funds large-scale redemptions. So, We should strengthen supervision of risk on Yuebao class money market funds.For market risk, factors that may trigger the market risk of Yuebao class monetary fund include duration and leverage ratio control strategy of Yuebao class monetary fund which affected by market rate of interest in practice, "No early withdrawal penalty" policy. I propose some regulatory proposals that the supervision department may gradually shorten the average residual maturity of the Fund to 90 days or less and change from no early withdrawal penalty to the loss limits of interest on the agreement deposit in order to gradually cancel the "No early withdrawal penalty" policy.For credit risk, factors that may trigger the credit risk of Yuebao class monetary fund include the selection, proportion, credit rating of investment variety portfolio of Yuebao class monetary fund in practice. I propose some regulatory proposals that the fund management company should do rational diversification of investment and strengthen self-discipline supervision on the credit risk.For liquidity risk, factors that may trigger the liquidity risk of Yuebao class monetary fund include the T+0 redemption mode which aggravates the maturity mismatch and the defect of the amortization cost method and the shadow pricing method. I propose some regulatory proposals that the supervision department should use float net valuation and change the redemption mode from T+0 to T+1 in extreme cases.