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Article 1. These Measures are formulated in accordance with the Law on Securities Investment Funds, Law on Banking Regulation and other relevant laws and regulations for the purpose of standardizing the granting of the status as a securities investment fund custodian, maintaining the competitive order in the securities investment fund custody sector, protecting the legitimate rights and interests of investors and parties concerned and promoting the healthy development of securities investment funds. Article 2. To engage in the business of securities investment fund (hereinafter referred to the "fund") custody, a commercial bank must obtain the status as a fund custodian after verification by China Securities Regulatory Commission (CSRC) and China Banking Regulatory Commission (CBRC). No commercial bank without the status as a fund custodian may engage in the business of fund custody. Article 3. A commercial bank that applies for the status as a fund custodian (hereinafter referred to "applicant") must meet the following requirements: (1) its net assets at the end of the year totaling not less than 2 billion yuan, and its capital adequacy ratio being up to the standard as provided for by the regulatory authority, for the last three fiscal years; (2) having a special fund custody department, which shall be independent of its other business departments; (3) the persons to assume senior officers of the fund custody department meeting the statutory requirements and there being at least five persons to be engaged in fund liquidation, accounting, investment supervision, information disclosure and internal auditing and control, who shall have the status of being employed in the fund sector; (4) being in a situation favorable to the safety of fund property under it custody; (5) having a highly effective clearing and accounting system; (6) having a fixed place necessary for the conducting of business of and an independent security monitoring system equipped for the fund custody department; (7) having an independent technical system for custody business as equipped for the custody department, including network, application, security and protection and data back-up systems; (8) having a sound internal auditing and monitoring system and risk control system; (9) having no record of major illegal or irregular acts for the last three years; and (10) other requirements as may be provided for by laws or regulations or by CSRC or CBRC with the approval of the State Council. Article 4. To ensure the safety of the fund property under its custody, an applicant must: (1) have equipment and facilities required for conducting the fund custody business; (2) keep separate account books for each fund and have fund assets under its custody well defined and independent of each other; (3) clearly separate its owned assets and fund assets under its custody; (4) supervise the investment operation of fund managers; (5) properly carry out the instructions of fund managers in disposing of and distributing fund assets; (6) make proper audit and check of the net assets, net value of a fund unit and prices for fund subscription and repurchase as determined by a fund manager; (7) keep properly the records, account books, statements and other materials concerning its fund custody business; and (8) have a sound internal custody system. Article 5. The applicant must have a sound clearing and accounting system, which must conform to the following provisions: (1) funds involved in the securities transactions occurring in the system must be able to be transferred within two hours; (2) it must be able to receive data from the relevant stock exchange in a safe manner; (3) it must be able to be connected with the systems of the relevant institutions in a safety manner, such as systems of fund managers, fund registration companies and securities registration and clearing companies; and (4) in such system, the liquidation and accounting must be able to be conducted promptly through the proper carrying-out of the investment instructions of the fund managers. Article 6. The applicant must have its place, security and precaution facilities and other facilities and systems for its fund custody business conform to the following provisions: (1) the business place of the fund custody department must be relatively independent with an entrance guarding system; (2) there must be a special room for the post with access to fund transaction data, which no person not concerned shall be allowed to enter; (3) there must be a well-defined security system for fund transaction data; (4) there must be a reliable fund custody data back-up system; and (5) there must be a fund custody emergency program to meet emergencies. Article 7. The applicant shall submit to CSRC the following application documents with copies thereof to CBRC: (1) a written application; (2) special capital verification reports in respect of its net assets and capital adequacy ratio as rendered by an accounting firm with qualifications for doing securities-related business; (3) a certificate certifying the establishment of a fund custody department; (4) provisions concerning the internal organizational structure and post responsibilities; (5) basic information of the persons to assume senior officers and staff members of the fund custody department, including the application materials of the persons to assume senior officers for assuming senior officers and the names, career records, copies of certificates certifying the status of being an employee in the fund sector, professional training and posts of persons to be the staff members; (6) a report on its conditions for the safety of the fund property under its custody; (7) a report on the test of its fund clearing and accounting system; (8) a plan for the business place, design plan for the security and monitoring system and a report on the installation and test; (9) a design plan for the fund custody business back-up system, emergency plan and a report on the test of the ability to meet emergencies; (10) its relevant business rules and regulations, including rules and regulations concerning business management, operation procedures, fund accounting and auditing, fund liquidation management, information disclosure, internal auditing and monitoring, internal control and risk management, information system management, security and file management, reporting of major suspicious transactions and emergency measures and other rules and regulations as may be required for a fund custodian; (11) a commercial plan for the development of its fund custody business; and (12) other documents as may be required by CSRC and CBRC. Article 8. CSRC shall, within five working days from receipt of the application documents, make a decision about whether or not to accept the application. A certificate of acceptance shall be issued to the applicant if all application documents have been prepared properly and submitted completely or, if the application documents are not submitted in a complete set or not prepared properly, the applicant shall be notified once for all of those required to be added or corrected. Article 9. CSRC shall, within 20 working days from acceptance of the application, make a decision about whether or not to grant an administrative license. In the case of a decision of granting, CSRC shall send the decision to CBRC for the latter¡¯s consent; in the case of decision not to grant the qualifications, the applicant shall be notified of the decision accompanied by the reasons for such decision indicated, upon which, the administrative licensing procedure shall be terminated. CBRC shall, within 20 working days from receipt of the decision sent for its consent, make a decision about whether or not to consent. In the case of consent, CSRC and CBRC shall jointly sign an approval document and CSRC shall issue a fund custody business license; in the case of disagreement, the applicant shall be notified of the same with reasons indicated, upon which, the administrative licensing procedure shall be terminated. Article 10. Before making a decision to grant an administrative license, CSRC and CBRC shall make a joint on-the-spot verification of the preparations for the establishment of a fund custody department of the applicant. The on-the-spot verification shall be carried out by at least two persons. The time taken for the on-the-spot verification shall not be calculated in the period of time mentioned in the preceding article. Article 11. A commercial bank having obtained the status as fund custodian shall be a fund custodian. Each fund custodian shall promptly apply for the status of being a senior officer for persons to be senior officers of its fund custody department and the status of being employed in the fund sector for persons to be staff members of its fund custody department, and handling corresponding employment formalities. Article 12. Each fund custodian shall do business according to law and in good faith, perform its duties, be diligent in doing business and effectively perform its statutory and contractual functions and duties. Article 13. Each fund custodian shall take proper measures to ensure that its fund custody business and selling agency business shall be independent of each other and effectively safeguard the integrity and independence of each fund asset under its custody. Article 14. Fund custodians shall communicate with each other and may not engage in any unfair competition or monopolize the market; Article 15. If an applicant conceals any facts or provides false application documents, CSRC and CBRC shall not accept its application or grant an administrative license and shall give the applicant a warning, and the applicant may not apply for the status as a fund custodian in a period of a year. If any applicant obtained the status as a fund custodian by means of fraud or bribery or any other unfair means, CSRC shall, in consultation with CBRC, revoke the applicant¡¯s status as a fund custodian, give the applicant a warning and a fine with its fund custody business license being nullified by CSRC; CBRC may, in the light of different circumstances, order the applicant to give a disciplinary sanction to the person in charge who is held directly responsible and other persons directly responsible, or give such persons warnings or fines, or prohibit them, for a specified period of time or for their lifetime, from employment in the banking sector; the applicant may not apply again for the status as a fund custodian in three years; those suspected of committing a crime shall be transferred to the judicial organ for investigation for assuming criminal liabilities. Article 16. CSRC and CBRC shall make supervision and administration of commercial banks' fund custody business according to law. Article 17. In the case of non-compliance with the requirements as provided for in Articles 3 to 6 hereof, the fund custodian concerned must promptly report it to CSRC and CBRC and get right within a specified time limit. If the fund custodian fails to report such non-compliance promptly, CSRC and CBRC shall order it to get right and give a warning and fine to the person in charge who is held directly responsible and other persons directly responsible; CBRC may order the fund custodian to give disciplinary sanctions to the person in charge who is held directly responsible and other persons directly responsible; in the case of a gross violation, CSRC may, in addition, suspend or revoke such persons' status of being a senior officer or being employed in the fund sector, and CBRC may, in addition, prohibit such persons, for a specified period of time or for their lifetime, from employment in the banking sector. Article 18. In the case of non-compliance with the requirements as provided for in Articles 3 to 6 hereof, if the fund custodian concerned fails to correct such non-compliance, CSRC shall, in consultation with CBRC, suspend or revoke its status as a fund custodian and shall nullify its fund custody business license; with regard to the person in charge who is held directly responsible and other persons directly responsible, CSRC shall, in consultation with CBRC, give them fines, and may, in addition, suspend or revoke such persons' status of being a senior officer or being employed in the fund sector, and CBRC may, in addition, prohibit such persons, for a specified period of time or for their lifetime, from employment in the banking sector; those suspected of committing a crime shall be transferred to the judicial organ for investigation for assuming criminal liabilities. Article 19. These Measures shall apply to domestic Chinese-funded commercial banks but not to any foreign-funded commercial bank. Article 20. These Measures shall come into force as of January 1, 2005. |
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