China to tighten regulatory arbitrage oversight

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BEIJING: China will strengthen oversight of arbitrage that takes advantage of uncoordinated regulations and increase penalties to prevent structural risks from getting out of control, a senior central banker said.

Mr Yin Yong of the People's Bank of China said on Saturday that six forms of arbitrage were problematic.

He said they involved differing maturities, credit conditions, investment liquidity, exchange rates, capital and information.

"These six forms of malicious regulatory arbitrage... could result in risks to the entire financial system getting out of control," Mr Yin said.

Chinese financial regulators have adopted a slew of "de-risking" measures in the face of ballooning debt and have ramped up efforts to unearth hidden problems.

He called for clear rules on who qualifies to make certain investments and said information disclosure procedures should be improved while risk management is made easier. - REUTERS