The rulebook China's top financial regulator released last week caps how much an asset management trust can put into a single asset at 25% of its net assets. The limit applies to new business from Jan. 1, 2027, in a sector that held about 24.43 trillion yuan at the end of June 2025, according to China Trustee Association data.

The National Financial Regulatory Administration published the 85-article Measures for Asset Management Trusts on Oct. 30, replacing rules for pooled trust plans that took effect in 2007 and were amended in 2009. Existing products get a transition period, which for some open-ended trusts runs to the end of 2029.

The overhaul matters to investors across Asia because China's trust industry was long at the center of its shadow banking system, for years using opaque structures to steer money to companies that struggled to get bank loans, Reuters has reported. The new limits push the industry further toward working like fund managers. They also bind the commercial banks, insurers and brokerages that, along with trust companies, are for now the only firms allowed to sell trust products.

What China's new trust rules require

The products stay private, with no more than 200 investors each. Individuals need two years of investing experience plus household net financial assets of at least 3 million yuan, household financial assets of 5 million yuan or average personal income of 400,000 yuan over the past three years, according to the text of the rules.

Entry tickets rise with risk. The minimum stake is 300,000 yuan for a fixed-income trust, 400,000 yuan for a mixed product and 1 million yuan for equity, commodity and derivatives trusts, and for any trust that holds nonstandard assets. Fixed-income and equity products must keep at least 80% of their money in their named asset class.

Concentration limits work at two levels. Within a product, no more than 25% of net assets can go into one asset or into one other asset management product, with exemptions for bank demand deposits, government bonds, central bank bills, policy bank bonds and local government bonds. No single investor can hold more than half of a product's units, and an institution and its affiliates together are capped at 80%.

Some specialist equity strategies get room. Closed-end trusts that buy listed shares only through strategic placements, private placements, block trades or negotiated transfers, or that invest only in unlisted companies, escape the 25% cap if every investor is an institution putting in at least 3 million yuan.

Across a whole trust company, all products combined cannot put more than 30 billion yuan into one asset or own more than 30% of a listed company's tradable shares. Money that products with individual investors place in nonstandard debt cannot exceed half of all the trust net assets the company manages.

Leverage is curbed. Structured trusts, which split investors into senior and junior tranches, face senior-to-junior ratios of no more than 3 to 1 for fixed income, 1 to 1 for equities and 2 to 1 for commodity, derivatives and mixed products. Borrowing cannot lift a structured product's total assets above 140% of its net assets, or 200% for other products.

Managers' pay is capped. Performance fees may not exceed 60% of returns above the benchmark set in the trust contract, and only products without an investment adviser may take them from cash payouts, no more than once every six months.

Trust companies may not promise principal or minimum returns, set expected rates of return, run capital pools or act as pass-through channels for other institutions. Open-ended trusts may not hold nonstandard assets, closed-end products must run at least 90 days, and open-ended ones can open at most once every seven days. Products that hold nonstandard assets and count individuals among their direct investors need an annual external audit of how their net asset value is calculated.

A 2029 deadline for legacy trust products

New business must comply from Jan. 1, 2027. For existing products, trust companies must draw up rectification plans, lock affected products and shrink them in an orderly way, Securities Daily reported. Products that breach the concentration limits can be brought into line by refusing new money or new assets, while open-ended trusts that open more often than every seven days may run to maturity, but no later than the end of 2029.

The regulator will treat rectification progress as an important basis for its tiered supervision of trust companies, an NFRA official said in a written question-and-answer release carried by Dahe Caifang. The final version, which followed public comment from Oct. 31 to Dec. 1, 2025, changes how investor concentration and portfolio limits are calculated, revises performance-fee rules and tightens liquidity management, the official said.

The industry has already moved away from its old model. Asset management trusts, measured on a fund-trust basis, made up 75.33% of all trust assets at the end of June 2025, according to the latest China Trustee Association figures cited by China Securities Journal. By then 61.6% of fund-trust money went to securities markets and financial institutions, up from 42.38% at the end of 2022, Securities Daily reported in December.

Trust rules land as Beijing backstops nonbank asset managers

It has been a busy stretch for China's nonbank money managers. On Oct. 26 the People's Bank of China created a swap facility to backstop wealth managers and fund houses facing mass redemptions, for systemically important bank wealth management units and mutual fund managers. On Nov. 2 the central bank, the NFRA and the securities regulator said a relending program for share buybacks would become permanent, at a rate cut to 1% from 1.25%. The next day the central bank ran a 100 billion yuan operation of its swap facility for securities firms, fund managers and insurers.

The first test comes on Jan. 1, 2027, when every newly launched asset management trust must meet the limits.