General Office of the China Banking Regulatory Commission, Issues Relevant to Regulating the Operation and Management of the Securities Business of Trust and Investment Companies Circular

中国银行业监督管理委员会办公厅关于规范信托投资公司证券业务经营与管理有关问题的通知

February 28, 2005 | BY

clpstaff &clp articles

Issued: November 16 2004Effective: as of date of issueMain contents: Trust and investment companies shall keep trust funds and their own funds under separate…

Clp Reference: 3320/04.11.16 Promulgated: 2004-11-16 Effective: 2004-11-16

Issued: November 16 2004
Effective: as of date of issue

Main contents: Trust and investment companies shall keep trust funds and their own funds under separate management and separate accounts, and the same applies to funds delivered by different settlors. Trust and investment companies shall, in accordance with the law, open designated trust property accounts for trust funds with commercial banks, open designated securities trust accounts with the Shanghai or Shenzhen Branch of the China Securities Depositary and Clearing Corporation Limited, and open designated trust funds accounts with securities companies approved by the China Securities Regulatory Commission (Item One). Regulatory departments at all levels shall strengthen regulation on securities business conducted by trust and investment companies within their respective jurisdiction, and may suspend a trust and investment company's securities business if there is serious violation of relevant regulations (Item Five). In addition, trust and investment companies are required to comply with the principles of portfolio investment and diversification of risks, to set out investment ratios and investment strategies in advance, to determine the stop-loss price to minimize risks, and to build up a scientific decision making mechanism, and a risk management system with a long standing effect, for securities investment (Items Two and Three). Specific provisions are also set out for limiting the ratio of securities investment with trust and investment companies' own funds (Item Four).
Related legislation: Issues Relevant to Opening of Designated Securities Trust Accounts and Designated Trust Funds Account by Trust and Investment Companies Circular, 2004; PRC Trust Law, Apr 28 2001, CLP 2001 No.5 p18; Administration of Trust and Investment Companies Procedures, Jun 5 2002, CLP 2002 No.6 p6; Administration of the Business of Holding Funds in Trust of Trust and Investment Companies Tentative Procedures, Jun 26 2002, CLP 2002 No.7 p15; Relevant Matters Concerning Opening and Use of Renminbi Bank Settlement Accounts of Trust and Investment Companies Circular, 2003 and Further Strengthening Regulation of Trust and Investment Companies Circular, 2004.

clp reference:3320/04.11.16promulgated:2004-11-16effective:2004-11-16

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