Regulatory Coordination Mechanism Of Financial Instituions’ Capital Management Buisness: Issues And Countermeasures

The total scale of the asset management industry exceeded $13 billion by the end of 2021 and plays a very important role in China’s financial development,but the inadequacy of the relevant regulatory systems and regimes has led to a series of problems such as regulatory arbitrage,regulatory vacuum and regulatory conflicts.The research in this paper shows that the main problems of the capital management industry stem from the deficiencies of the regulatory system it faces,especially the regulatory coordination mechanism.The paper firstly discusses the current situation and problems of the regulatory coordination mechanism of the custody business from two dimensions: the regulatory model and legal design,and the practice of regulatory coordination.Accordingly,this paper also reveals the causes of the failure of the regulatory coordination mechanism by applying the theories of path dependence and regulatory failure in law and economics at three levels: regulatory model,legal design and regulatory practice.This paper also draws on foreign experience to analyse the "multi-functional regulation" model in the US,the "twin-peak regulation" model in the UK(transformed from "single regulation")and the single-regulation models in Japan,Korea and Singapore,and further conducts a "cost-benefit" analysis of the regulatory coordination of these regulatory systems.Based on the analysis of real-life problems and overseas experience,this paper introduces the latest government institutional reform plan and puts forward suggestions to improve the existing regulatory coordination mechanism: to implement the concept of equal emphasis on coordination between institutional and functional regulation,prudential and behavioural regulation,and to introduce the concept of "penetrating regulation";to clarify by law the authority and responsibilities of "one commission,one department,one bureau and one council",and to establish the position of the China Securities Regulatory Commission as the main regulator in the capital management industry;and to establish a sound mechanism for information sharing and emergency response work.