Recently, the China Securities Regulatory Commission ("CSRC") and the China Banking and Insurance Regulatory Commission ("CBIRC") have jointly revised and promulgated the Administrative Measures for the Custody Business of Securities Investment Funds (the "Measures"), with effect from the date of promulgation.
The Measures mainly make the following revisions: first, according to the unified arrangement of the state for the opening-up of the financial industry, branches of foreign banks in China are permitted to apply for custody business qualification for securities investment fund (the "fund"); financial indicators such as net assets may be calculated according to those of their overseas head offices; the liability to be borne by overseas head offices is clarified and supporting risk control arrangements are tightened. The Measures apply to subsidiary banks of both Chinese and foreign banks. Second, the Measures improve the regulatory requirements, appropriately adjust the net asset access criteria for fund custodians, strengthen the centralized and unified management of the fund custody business, improve the ongoing compliance requirements for fund custodians, enrich administrative regulatory measures, and strengthen the implementation of effective regulation. Third, according to the Measures, it is necessary to continue to streamline administration and delegate powers to lower levels, simplify the application materials, optimize the examination and approval procedures, and implement "approval before fundraising". Fourth, the Measures unify the access standards and regulatory requirements for commercial banks and other financial institutions, and integrate and incorporate the relevant provisions on non-bank financial institutions' engagement in fund custody business into the Measures.