(Deliberated and adopted at the 21st chairman’s executive meeting of the China Securities Regulatory Commission on August 1, 2012, and revised in accordance with the Decision of the China Securities Regulatory Commission on Amending the Measures for the Administration of the Customer Asset Management Business of Securities Companies by the Order No. 93 of the China Securities Regulatory Commission on June 26, 2013)
Chapter I General Provisions
Article 1 In order to regulate the customer asset management activities of securities companies, protect the lawful rights and interests of investors, and maintain the order of the securities market, these Measures are formulated in accordance with the Securities Law of the People’s Republic of China, the Securities Investment Fund Law of the People’s Republic of China, the Regulation on Supervision and Administration of Securities Companies, and other relevant laws and administrative regulations.
Article 2 These Measures shall apply to the securities companies engaging in the customer asset management business within the territory of the People’s Republic of China.
Where there are otherwise different provisions on the customer asset management business of securities companies in any law or administrative regulation or as required by the China Securities Regulatory Commission (hereinafter referred to as the CSRC), such provisions shall apply.
Article 3 A securities company engaging in the customer asset management business shall comply with relevant laws, administrative regulations and the provisions of the CSRC, adhere to the principles of fairness and impartiality, maintain the legitimate rights and interests of customers, being honest and trustworthy as well as diligent and duteous, and avoid conflict of interest.
A securities company engaging in the customer asset management business shall obtain a complete understanding of the customers, classify the customers, and recommend appropriate products or services to customers in the principle of risk matching, and is prohibited to mislead customers to purchasing the products or services which do not conform to their risk tolerance.
Customers shall independently assume investment risks and may not impair the national interest, the public interest, and the legitimate rights and interests of others.
Article 4 A securities company engaging in the customer asset management business shall, in accordance with the provisions of these Measures, apply to the CSRC for the qualification for the customer asset management business. The securities companies without obtaining the qualification for the customer asset management business shall not engage in the customer asset management business.
Article 5 A securities company engaging in the customer asset management business shall, in accordance with the provisions of these Measures, conclude asset management contracts with its customers, operate the customer assets according to the methods, conditions, requirements and limitations as agreed upon in the asset management contracts, and provide the customers with the investment management services regarding securities and other financial products.
Article 6 A securities company engaging in the customer asset management business shall conduct centralized operation management, and conclude uniformly asset management contracts with other parties.
Article 7 A securities company engaging in the customer asset management business shall establish sound risk control system and compliance management system, take effective measures to separate the customer asset management business from its other businesses, control the improper flow and usage of sensitive information, and prevent insider trading and conflict of interest.
Article 8 Stock exchanges, securities registration and settlement institutions and the Securities Association of China (the “SAC”) shall, in accordance with laws, administrative regulations and the provisions of the CSRC, conduct standardized and orderly self-disciplinary management and industry guidance on the customer asset management business of securities companies.
Article 9 The CSRC and the local CSRC offices shall, in accordance with laws, administrative regulations and the provisions of these Measures, conduct supervision and administration on the customer asset management activities of securities companies.
Article 10 Securities companies shall be encouraged, on the premise of effectively controlling risks, to make innovations for the asset management business in accordance with law.
The CSRC and the local CSRC offices shall, in the principle of prudential supervision, take effective measures to promote the standardized and orderly implementation of the innovation activities regarding asset management of the securities companies.
Chapter II Scope of Business
Article 11 A securities company may engage in the following customer asset management businesses in accordance with law:
(1) handling the directional asset management business for a single customer;
(2) handling the collective asset management business for two or more customers; and
(3) handling the special asset management business with special purpose for customers.
Article 12 A securities company shall, when handling the directional asset management business for a single customer, conclude a directional asset management contract with the customer, and provide the customer with asset management services through a special account.
Article 13 A securities company shall, when handling the collective asset management business for more than one customer, create a collective asset management plan, enter into a collective asset management contract with each customers, transfer customer assets to an asset custody institution qualified for the fund custody business for custody, and provide customers with asset management services through special accounts.
Article 14 A securities company shall, when handling the special asset management business for specific purpose for a customer, enter into a special asset management contract, design specific investment objectives tailored to the customer’s special requirements and the specific circumstances of underlying assets, and provide customers with asset management services through a special account.
A securities company shall fully understand and disclose to a customer the information on the credibility and compliance of the owners of underlying assets or the parties raising funds, the ownership of underlying assets, any collateral arrangements and the details thereof, the risk-return characteristics of the investment targets, and other relevant major matters.
A securities company may handle the special asset management business by creating a general collective asset management plan.
Article 15 A securities company which has obtained the qualification for the customer asset management business may handle the directional asset management business, and shall, when handling the special asset management business, file an application to the CSRC item by item in accordance with the provisions of these Measures.
Article 16 A securities company conducting the customer asset management business shall have no less than five investment sponsors. Each investment sponsor shall have three or more years of experience in securities investment, research or investment consultation or other similar experience, have good integrity records and professional ethics, and pass the registration of the SAC.
Article 17 A securities company shall, within five working days after its initiation and formation of the collective asset management plan, report the circumstances of the initiation and formation of the collective asset management plan to the SAC for filing, and concurrently forward them to the domicile of the securities company, and the local CSRC office in the place where an asset management branch is located.
Article 18 A securities company shall, when filing the initiated and formed collective asset management plan, submit the following materials:
(1) filing report;
(2) statement, contract text and risk disclosure statement on the collective asset management plan;
(3) agreement on custody of assets;
(4) compliance review opinions of the compliance director; and
(5) other materials as required by the CSRC.
Chapter III Basic Business Rules
Article 19 A securities company conducting the customer asset management business shall, in accordance with laws, administrative regulations, and the provisions of these Measures, enter into a written asset management contract with each customer to explicitly agree on the rights and obligations of both parties and other relevant matters. An asset management contract shall include the required content as prescribed in Articles 93 and 94 of the Securities Investment Fund Law of the People’s Republic of China.
Article 20 A securities company shall, in accordance with relevant laws and regulations, formulate sound and effective valuation policies and procedures, and conduct evaluation on the implementation effects thereof on a regular basis to ensure the fairness and reasonableness of the valuation of the collective asset management plan. The specific provisions on valuation shall be formulated separately by the SAC.
Article 21 When a securities company handles the directional asset management business, the net value of the assets it receives from a single customer may not be less than RMB 1 million.
Article 22 A securities company may, when handling the collective asset management business, only accept the assets in the form of money funds.
Article 23 A securities company shall divide its collective asset management plan into equal shares, and classify such shares into different categories according to risk-return characteristics. The shares of the same category under the collective asset management plan shall enjoy the equal rights and interests, and assume equivalent risks, except as otherwise required by the provisions of Article 27 of these Measures.
Article 24 A securities company may, when establishing a collective asset management plan, either formulate or not the provisions regarding the period of continual existence of the plan.
A collective asset management contract shall explicitly specify the time, methods, prices, procedures and other matters for customers’ participation in or withdrawal from the collective asset management plan.
Any customer who participates in a collective asset management plan shall not transfer its shares, except as otherwise provided for by any law or administrative regulation or the provisions of the CSRC.
Article 25 A securities company may participate, with its own funds, in the collective asset management plan established by the company itself, and may not withdraw its self-owned funds invested during the period of raising and popularization and for which it undertakes liabilities as agreed upon by the contract. The participation and withdrawal of self-owned funds during the period of continual existence of the plan shall comply with relevant provisions.
Securities companies, asset custodian institutions and customers shall expressly agree on, in the asset management contract, the conditions, procedures, risks disclosure, information disclosure and other matters for the participation and withdrawal of self-owned funds. Where the liabilities for self-owned funds are agreed upon by the contract, the amount of the funds shall also be specified. Securities companies shall take measures to effectively prevent conflict of interest and protect the interests of customers.
The funds invested by a securities company shall be deducted correspondingly according to the liabilities undertaken by the company when the amount of its net capital is calculated.
Article 26 A securities company may promote collective asset management plans by itself or authorize another securities company, a commercial bank, or any other institution recognized by the CSRC to do so.
A collective asset management plan shall be promoted to qualified investors, and the number of qualified investors may not exceed 200 in total. A qualified investor means an entity or individual possessing the appropriate risk identification ability and the tolerance for the risks associated with the collective asset management plan for investment and meeting any of the following conditions:
(1) The total financial assets of the individual or household are not less than 1 million yuan.
(2) The net assets of the institution, such as company or enterprise, are not less than 10 million yuan.
A collective investment product of any description legally created and supervised shall be regarded as a single qualified investor.
Article 27 Before the formation of a collective asset management plan is completed, the participating funds of a customer may only be deposited into the special account designated by the shares registration agency for collective asset management plan, and shall not be used.
Article 28 Where a securities companies operates the investments of the collective asset management business, and conduct securities trading in stock and futures exchanges or other exchanges, it shall comply with the relevant provisions of the exchanges. Securities companies may also conduct the securities trading in stock exchanges through special trading booths.
The securities companies conducting trading out of the exchanges shall abide by the relevant management rules.
Article 29 Where a securities company invests the customer assets under its management in the securities issued or underwritten during the underwriting period by the company itself or a company affiliated to it or in other material affiliated transactions, it shall adhere to the principle of giving priority to the interests of customers, obtain the prior consent of the customers, inform the asset custody institution and the customer thereafter, concurrently report to the stock exchange, and take effective measures to prevent conflicts of interest and protect the lawful rights and interests of customers.
Article 30 Where any factor out of a securities company, such as fluctuation in the securities market, merger of securities issuers, change of the scale of an asset management plan and so forth, causes any inconformity of an investment under the asset management plan with the proportion as set forth by Article 31 and Article 32 of these Measures or with the investment proportion as agreed upon by the asset management contract, the securities company shall explicitly specify the corresponding handling principles in the contract, make adjustments in a timely manner according to law, and report to the domicile of the securities company, the local CSRC office in the place where an asset management branch is located and the SAC.
Article 31 When a securities company handles the directional asset management business, its customers shall voluntarily exercise the rights to the securities it holds, and perform corresponding obligations.
Where, when a securities company invests the customer assets regarding the directional asset management business in the stocks of a listed company, the customer is required to perform its obligations of announcement, report, tender offer and so forth as provided for by any law or administrative regulation or by the CSRC, the securities company shall promptly notify the customer concerned, and urge it to perform the corresponding obligations. If the customer refuses to perform the said obligations, the securities company shall report to the stock exchange.
Article 32 A securities company shall exercise, on behalf of its customers, the rights to the securities under the collective asset management plan, and perform the corresponding obligations.
Article 33 A securities company shall not commit any of the following acts when engaging in the customer asset management business:
(1) appropriation of customer assets;
(2) promising a customer that the principal of its assets will not suffer any loss or may obtain the lowest income at a minimum;
(3) misleading or inducing any customer by fraud or any other improper means;
(4) operating the customer asset management business and other businesses in a mixed manner;
(5) conducting securities trading between the proprietary securities account and the asset management account or among different asset management accounts for the purpose of transferring the income or loss in the asset management account, thus impairing the benefits of customers;
(6) seeking illegal interests for a third party by making use of the customer assets under its management so as to conduct tunneling;
(7) conducting the trading of self-operated business in preference to that of the asset management business, thus impairing the benefits of customers;
(8) conducting unnecessary securities trading with customer assets for the purpose of obtaining commissions or other benefits;
(9) conducting insider trading or manipulating the market; and
(10) other acts as prohibited by any law or administrative regulation or any provision of the CSRC.
Article 34 A securities company shall, when handling the collective asset management business, abide by the following provisions in addition to those as set forth in the preceding article:
(1) It shall not illegally use the assets under the collective asset management plan for lending of funds, loans, mortgage financing, external guarantee or other purposes.
(2) It shall not use the assets under the collective asset management plan for the investment for which it may bear unlimited liabilities.
Chapter IV Risk Control and Customer Assets Custody
Article 35 A securities company shall, when conducting the customer asset management business, explicitly set forth in the asset management contract that a customer shall assume investment risks by itself.
Article 36 A securities company shall truthfully disclose to the customers its qualification for the customer asset management business, management capacities, performance and other circumstances, and shall completely disclose market risks, the legal risks incurred by the securities company to its customers due to the loss of its qualification for the customer asset management business, and other investment risks.
A securities company shall, when introducing the expected investment incomes to its customers, scrupulously comply with the principle of being honest and trustworthy, provide sufficient and reasonable bases, and issue a special statement in writing that the said expected incomes are only for customers’ reference, and may not constitute a commitment of the securities company to its customers.
Article 37 A securities company and its popularizations institution shall, before concluding an asset management contract, get understanding of a customers’ assets and income status, risk tolerance, investment preference and other basic information, and the customer shall truthfully provide the relevant information. The securities company and its popularization institutions shall recommend an appropriate asset management plan to the customer according to the information they learn about the customer.
A securities company shall, when establishing a collective asset management plan, make a clear definition of the conditions of the customer, and the popularization scope of the collective asset management plan. The customer participating in the collective asset management plan shall have corresponding financial investment experience and risk tolerance.
Article 38 A customer shall make a commitment on the legality of the source and use of its assets. If the customer fails to make such a commitment or the securities company clearly knows that the source or use of the customer’s assets is illegal, it shall not conclude an asset management contract.
No one shall illegally collect funds from others to participate in a collective asset management plan.
Article 39 A securities company and other promotion institutions shall take effective measures and utilize the electronic information disclosure platforms of the securities company, the SAC and the CSRC or any other information disclosure platform recognized by the CSRC to disclose information on the approval or recordation, risk-return characteristics, and complaints hotline, among others, of asset management plans in an objective and accurate manner, so as to enable the customers to have a full understanding of the characteristics and risk, among others, of asset management plans, as well as the customers’ rights and obligations, but may not promote asset management plans through radio, television, newspapers, periodicals, internet or other public media.
Article 40 A securities company shall, each quarter at a minimum, provide a customer with an accurate and complete asset management report to make a detailed description on the allocation of customer assets, value variations and other circumstances within the period of the report.
A securities company shall ensure the customers to be able to inquire the information on the allocation of customer assets and so forth at the time and in the form as set forth in the asset management contract. In case of any major matter which may affect a customer’s benefits, as mentioned in the asset management contract, the securities company shall inform the customer in a timely manner.
Article 41 A securities company shall, when handling the directional asset management business, ensure that customer assets are independent of its self-owned assets and the assets of different customers. It shall also establish separate accounts for the assets of different customers to conduct independent accounting and manage the assets in separate accounts.
Article 42 A securities company shall, when handling the collective asset management business, ensure that the assets under the collective asset management plan are independent of its self-owned assets and the assets of other customers, and that the assets under different collective asset management plans are independent of each other. It shall also set up separate accounts to conduct independent accounting and manage the assets in separate accounts.
Article 43 A securities company shall, when handling the directional asset management business, hand over the entrusted assets of a customer to the designated commercial bank responsible for depository of customer trading settlement funds, the China Securities Depository and Clearing Corporation Limited or the securities companies approved by the CSRC and other asset custodian institutions for custody.
Article 44 A securities company shall, when handling the collective asset management business, deliver the assets under a collective asset management plan to an asset custody institution qualified for the fund custody business for custody.
A securities company and an asset custody institution shall open separate securities accounts, capital accounts and other relevant accounts for the collective asset management plans. The name of a securities account shall indicate the name of the securities company and the title of the collective asset management plan, among others.
Article 45 A securities company shall establish the fair trading system and the abnormal trading daily monitoring mechanism to fairly treat different assets under its management, monitor the obverse and reverse transactions occurred between different investment portfolios, and regularly report such transactions to the domicile of the securities company, the local CSRC office in the place where an asset management branch is located and the SAC.
Article 46 An asset custodian institution shall have a special department responsible for the custody of the assets of the asset management business, and shall strictly separate the assets in custody of the asset management business from its self-owned assets and other assets under its management.
Article 47 An asset custodian institution shall, when handling the asset custody business with respect to asset management, perform the following duties:
(1) safekeeping the assets of the asset management business;
(2) enforcing the securities company’s investment or liquidation instructions, and handling the fund inflow and outflow in the operation of the assets of the asset management business;
(3) supervising the operation of the securities company’s asset management business, and requiring the securities company to make a correction if the securities company’s investment or liquidation instructions are found having violated any law or administrative regulation, any provision of the CSRC, or any agreement in the asset management contract; if the securities company fails to make a correction, the asset custodian institution shall refuse to enforce the said instructions, and report to the domicile of the securities company, the local CSRC office in the place where an asset management branch is located and the SAC ;
(4) issuing the report on custody of assets; and
(5) other matters as agreed upon in the asset management contract.
Article 48 An asset custodian institution shall have the right to inquire the information on the operation of the asset management business at any time, and shall verify the information on the assets of the asset management business on a regular basis, so as to prevent the assets from being appropriated or lost.
Article 49 Where, due to expiry of the term of investment management as agreed upon by a directional asset management contract or for any other reason as set forth in the contract, the asset management contract shall be terminated, the securities company shall, after deducting all the expenses as set forth in the contract, return all the assets in the customer’s account to the customer for the management by itself.
Where, due to expiry of the term of investment management as agreed upon by a collective asset management contract or for any other reason as set forth in the contract, the operation of the collective asset management plan shall be terminated, the securities company and its asset custodian institution shall, after deducting all the expenses as set forth in the contract, assign all the assets under the collective asset management plan to the customer in the form of currency funds according to the shareholding of the customer or according to the agreements of the collective asset management contract, and cancel the securities account, the funds account and other relevant accounts.
Chapter V Regulatory Measures and Legal Liabilities
Article 50 Where a securities company is subject to any of the following circumstances, the CSRC shall not accept the application for the establishment of a special asset management plan; where any application has been accepted, the examination and verification shall be temporarily postponed. The securities company shall be ordered to suspend the signing of new collective and directional asset management contracts:
(1) where a securities company is investigated by the CSRC as it is suspected of any violation of law or regulation, except when the securities company can prove that the placing of a case on file for investigation is evidently irrelevant with the asset management business;
(2) where the securities company falls in the period of rectification as a result of the occurrence of major risk events, eligibility management invalidation, major information safety events, and other matters able to indicate material defects exist in the internal control of the company; or
(3) any other circumstance as provided for by the CSRC.
Article 51 A securities company shall formulate an internal inspection system for the operation of the customer asset management business, and conduct self-inspections on a regular basis.
A securities company shall work out reports on the customer asset management business on a quarterly basis, submit them to the SAC for filing, and concurrently forward them to the domicile of the securities company and the local CSRC office in the place where an asset management branch is located.
Article 52 A securities company shall, when popularizing a collective asset management plan, place the collective asset management contract, the description on the collective asset management plan and other formal popularization documents at the business places for popularizing the collective asset management plan of the securities company and other popularization institutions.
Article 53 A securities company shall, when making an annual audit, audit the information on the operation of the customer asset management business, and require the accounting firm to issue a single audit opinion regarding each collective asset management plan.
A securities company shall report the audit results to the CSRC for filing and concurrently forward them to the domicile of the security company, the local CSRC office in the place where an asset management branch is located, and provide customers and asset custodian institutions with the single audit opinion of each collective asset management plan.
Article 54 A securities company or an asset custodian institution shall preserve the accounting books on the customer asset management business in accordance with the provisions of relevant laws and administrative regulations, and appropriately preserve relevant contracts, agreements, trading records and other documents and materials.
Article 55 The CSRC and its local offices shall conduct, on a regular or unscheduled basis, inspections on the customer asset management business conducted by securities companies and asset custody institutions, and securities companies and asset custodian institutions shall provide assistance.
Article 56 Where a senior executive, directly liable person in charge, or any other directly liable person of a securities company, an asset custody institution, or a promotion institution violates these Measures, the CSRC and its local office shall, according to different circumstances, take an administrative regulatory measure against such a person, such as a regulatory interview, an order of desisting from performing duties, or a determination of unfitness for a position.
A securities company, an asset custody institution or a promotion institution or a senior executive, the directly liable person in charge or any other directly liable person thereof which cause damage to a customer’s lawful rights and interests in engaging in the customer asset management business shall assume civil liabilities in accordance with the law.
Article 57 Where a securities company, an asset custody institution, or a promotion institution violates these Measures, the CSRC and its local office shall, according to different circumstances, take an administrative regulatory measure against it in accordance with the law, such as an order of correction, an order of increasing the frequency of internal compliance inspection, an order of taking disciplinary actions against relevant persons, or suspension of business.
Article 58 A securities company, an asset custody institution, or a promotion institution or a senior executive, the directly liable person in charge, or any other directly liable person thereof which violates any law or regulation shall be subject to administrative punishment in accordance with the Securities Law of the People’s Republic of China, the Securities Investment Fund Law of the People’s Republic of China, and the Regulation on the Supervision and Administration of Securities Companies.
Article 59 A securities company, an asset custody institution, or a promotion institution or a senior executive, the directly liable person in charge, or any other directly liable person thereof which is suspected of a crime shall be transferred to the judicial authority for criminal liability in accordance with the law.
Article 60 Where a securities company is ordered by CSRC to suspend its customer asset management business due to its violation of any law or regulation in its business operations or the inconformity of any of its financial indices with the provisions of CSRC, it shall not conclude any new asset management contract during the period of suspension; if its qualification for the customer asset management business is revoked by the CSRC in accordance with law, it shall stop its asset management activities, and handle the matters regarding the termination of the contract in accordance with the provisions of Article 49 of these Measures.
Chapter VI Supplementary Provisions
Article 61 The meaning of “affiliated parties to” shall be the same as that as mentioned in the Accounting Standards for Enterprises No.36 – Disclosure of Affiliated Parties.
Article 62 Other institutions approved by the CSRC to engage in the customer asset management business shall abide by and implement these Measures.
Article 63 These Measures shall come into force on the date of issuance. The Measures for the Administration of the Customer Asset Management Business of Securities Companies (Order No. 87 of the CSRC) issued by the CSRC on October 18, 2012 shall be repealed simultaneously.
