Analysis On The Reasons For The Changes In Product Size Under The Background Of The New Regulations On Fast Redemption Of Internet Money Funds

Since the issue of the first money market mutual fund by Hua An Funds Management Company in 2003,China's money-fund market has been innovatively combined with Internet technology after a decade of development in the era of rapid development of the Internet industry.Especially in the middle of 2013,the birth of Tian Hong Yu 'E Bao money market mutual fund marked the emergence of Internet money fund products.At the beginning of its birth,Internet money funds provided relatively efficient investment channels for investors,especially small and medium-sized investors,by virtue of high returns,high liquidity and low investment threshold.In just three and a half years,Yu 'E Bao has become the largest open-end fund product in the world.However,the wild development of Internet money funds has not onlyraised concerns in the market,but also put pressure on regulators to effectively prevent systemic risks.Since 2017,out of the consideration of risk reduction,regulatory control has become increasingly strict.Among them,the "Guiding Opinions on Further Regulating Money Market Funds for Internet Sales and Redemption of Related Services" issued by the CSRC and the PBC on June 1,2018 has the greatest impact.This paper reviews the birth of money-funds and the development of Internet money-funds in China,and analyzes the reasons why Internet money-funds represented by Yu 'E Bao is popular in the market.The background of relevant regulations,especially the new regulation on fast redemption limit,was sorted out.The influence path of the new regulation on product size was analyzed from the perspective of economics,and the TAR threshold auto-regression test was conducted on the net value scale data of Yu 'E Bao in 2018.The results show that compared with traditional money-funds,Internet money-funds have higher returns and stronger liquidity,while the risks behind them are higher,and strict supervision is especially necessary.The new rules of quick redemption affects the product size mainly by affecting the liquidity of investors themselves.From the perspective of behavioral finance,investors' lack of necessary investment knowledge,the herd effect caused by investors' herd mentality,and the market noise caused by disposition effect and regret aversion can also explain the decline of product size.The new regulation,especially the new regulation of quick redemption,has indeed played a role in cooling the market.The empirical test also shows that the policy introduction has a thresholdeffect on the product size.Finally,based on the above research,this paper proposes some suggestions for fund investors,fund management companies and regulators.