Measures for the Administration of the Customer Asset Management Business of Securities Companies

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Nov 18, 2013 (3 years and 8 months ago)

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Measures for the Administration of the Customer Asset Management Business of
Securities Companies




Chapter I General Provisions




Article 1 In order to regulate the customer asset management activities of securities
companies, protect the legitima
te rights and interests of investors, and maintain the order
of the securities market, these Measures are formulated in accordance with the
Securities
Law
, the Regulation on Supervision and Administration of Securit
ies 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
prov
isions 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 under
standing 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 ri
sk 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 man
agement
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 wi
th 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 ot
her 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 securiti
es 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 impr
oper 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 accordanc
e 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 comp
anies 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
effectiv
e 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 cust
omer 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 ma
nagement 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 provid
e 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, establish an collective asset
management plan, conclude

an collective asset management contract with its customers,
transfer the customer assets, for custody, to a commercial bank responsible for depository
of customer trading settlement funds, the China Securities Depository and Clearing
Corporation Limited o
r the securities companies and other asset custodian institutions
accredited by the CSRC, and provide customers with asset management services through
special accounts.




Article 14 A securities company may, when handling the collective asset
managemen
t business, establish a

restrictive

collective asset management plan and a
non
-
restrictive collective asset management plan.


The assets under a restrictive collective asset management plan shall be primarily used
for investment in treasury bonds, bond
-
typ
e securities investment funds, corporate bonds
listed in stock exchanges, and other fixed
-
income financial products with high credibility
and strong liquidity. The assets invested in stocks and other equity securities as well as
stocks
-
type securities inve
stment funds shall not exceed 20% of the net value of the
assets under this plan, and shall observe the principle of dispersing investment risks.


The investment scope of the non
-
restrictive collective asset management plan shall be
agreed upon by the coll
ective asset management contract and shall be not subject to the
restriction of the preceding paragraph.




Article 15 A securities company shall, when handling the special asset management
business with specific purpose for a customer, conclude a spec
ial asset management
contract, design certain investment objectives according to the customer's special
requirements and the specific circumstances of assets, and provide customers with asset
management services through a special account.


A securities com
pany may handle the special asset management business by establishing
a comprehensive collective asset management plan.




Article 16 A securities company which has obtained the qualification for the
customer asset management business may handle the dir
ectional 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 17 A securities company conducting the custo
mer 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 integr
ity records and professional
ethics, and pass the registration of the SAC.




Article 18 A securities company shall, within five working days after its initiation and
formation of the collective asset management plan, report the circumstances of the
in
itiation 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.




Articl
e 19 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 20 A securities company conducting the customer asset

management
business shall, in accordance with laws, administrative regulations and the provisions of
these Measures, conclude a written asset management contract with each customer to
explicitly set forth the rights and obligations of both parties and oth
er relevant matters.


An asset management contract shall include the following basic items:


(1) categories and amounts of customer assets;


(2) investment scope, investment restrictions and investment proportion;


(3) investment objectives and management

term;


(4) management methods and management authorities of customer assets;


(5) disclosure of various risks;


(6) provision and inquiry modes of the information on customer asset management;


(7) rights and obligations of the parties;


(8) calculation a
nd payment methods for management remuneration;


(9) drawing and payment methods for other fees concerning asset management;


(10) conditions and procedures for rescinding and terminating the contract, and the
matters concerning the liquidation and return
of customer assets;


(11) liabilities for breach of contract, and methods for disputes settlement; and


(12) other matters as required by the CSRC.




Article 21 A collective asset management contract shall, in addition to conforming to
the provisions o
f the preceding paragraph, agree on the conditions for and the date of the
operation of the collective asset management plan, the duties of a asset custodian
institution, custody methods and the custody fees, evaluation of net value of customer
assets, con
firmation and distribution of investment income and other matters.


A collective asset management contract shall be concluded by three parties, namely, the
securities company, the asset custodian institution and the single customer.




Article 22 A sec
urities 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 reasonablen
ess of the valuation of the collective asset management plan. The
specific provisions on valuation shall be formulated separately by the SAC.




Article 23 When a securities company handles the directional asset management
business, the net value of th
e assets it receives from a single customer may not be less
than RMB 1 million.




Article 24 A securities company may, when handling the collective asset
management business, only accept the assets in the form of currency funds.


Where a securities com
pany establishes a restrictive collective asset management plan,
the amount of the funds it receives from a single customer may not be less than RMB
50,000; if it establishes a non
-
restrictive collective asset management plan, the amount of
the funds it re
ceives from a single customer may not be less than RMB 100,000.




Article 25 A securities company shall divide its collective asset management plan
into equal shares, and classify such shares into different categories according to
risk
-
return character
istics. 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 26 A s
ecurities 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 27 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 co
mply 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 par
ticipation 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 28 A securities c
ompany may either popularize the collective asset
management plan by itself, or entrust another securities company, commercial bank or the
institution authorized by the CSRC to popularize the plan on its behalf.


Before participating in a collective asset

management plan, a customer shall have already
been the customer of the securities company itself or of another popularization agency.




Article 29 Before the formation of a collective asset management plan is completed,
the participating funds of a c
ustomer 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 30 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 sp
ecial trading booths.


The securities companies conducting trading out of the exchanges shall abide by the
relevant management rules.




Article 31 Where the assets under the collective management plan managed by a
securities company are invested into

the securities issued by a company, such securities
shall not exceed 10% of the total quantity of the securities issued. The investment of a
collective asset management plan in the securities issued by a company shall not exceed
10% of the net value of th
e assets under this plan, expect as otherwise provided for by the
CSRC.




Article 32 Where a securities company invests the customer assets under its
management in the securities issued by the company itself or a company that is an
affiliated party to

itself, it shall obtain the consent of the customer in advance and inform
the asset custodian institution and the customer thereafter, and concurrently report to the
stock exchange.


When a securities company handles the collective asset management busine
ss, the funds
invested by a single collective asset management plan in the securities as mentioned in
the preceding paragraph shall not exceed 7% of the net value of the assets under the
collective asset management plan.


The restrictions on proportion as
set forth by the preceding paragraph shall not apply to
the collective asset management plan investing in index funds or making securities
investment in strict compliance with the composition of relevant indices.




Article 33 Where any factor out of a

securities company, such as fluctuation in the
securities market, merger of securities issuers, change of the scale of a asset
management plan and so forth, causes any inconformity of an investment under the asset
management plan with the proportion as se
t 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 adjustment
s 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 34 When a securities company handles the directional ass
et 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 35 A securities company shall exercise, on beha
lf of its customers, the rights
to the securities under the collective asset management plan, and perform the
corresponding obligations.




Article 36 A securities company shall not commit any of the following acts when
engaging in the customer asset ma
nagement 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 impro
per 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 acco
unts for the purpose of
transferring the income or loss in the asset management account, thus impairing the
benefits of customers;


(6) seeking illegal interest for a third party by making use of the customer assets under its
management so as to conduct tu
nneling;


(7) conducting the trading of self
-
operated business
in

preference

to

that of the
asset
management business, thus impairing the benefits of cu
stomers;


(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 administra
tive regulation or any provision of the
CSRC.




Article 37 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 n
ot 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 38 A securities company shall, when conducting the customer asset
management business, explicitly set forth in the asset management contract t
hat a
customer shall assume investment risks by itself.




Article 39 A securities company shall truthfully disclose to the customers its
qualification for the customer asset management business, management capacities,
performance and other circumstance
s, 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, whe
n 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 onl
y for customers' reference, and may not constitute a
commitment of the securities company to its customers.




Article 40 A securities company and its popularizations institution shall, before
concluding a asset management contract, get understanding o
f 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 ap
propriate 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 th
e 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 41 A customer shall make a commitm
ent 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 42 A securities company and its other popularization institutions shall take
effective measures to, through the electronic information di
sclosure platforms of the
securities company, the SAC and the CSRC or any other information disclosure platform
approved by the CSRC, disclose the approved or filed information under the asset
management plan, risk return characteristics, complaints hotlin
e and so forth in an
objective and accurate manner, so as to enable the customers to learn in detail the
characteristics, risks and other circumstances of the collective asset management plan,
as well as the customers' rights and obligations, but shall not

popularize the asset
management plan through radio, television, newspapers and periodicals or other public
media.




Article 43 A securities company shall, each quarter at a minimum, provide a
customer with an accurate and complete asset management rep
ort 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 c
ustomer 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 th
e customer in a timely manner.




Article 44 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 difference 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 45 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 sep
arate accounts to conduct independent accounting and
manage the assets in separate accounts.




Article 46 A securities company shall, when handling the directional asset
management business, hand over the entrusted assets of a customer to the designate
d
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 47 A securities company shall, when handling the collective asset
management business, hand over the assets under collective asset management plan to
the designated commercial bank responsible for depository of customer trading
settlement funds, th
e China Securities Depository and Clearing Corporation Limited or the
securities companies approved by the CSRC and other asset custodian institutions for
custody.


A securities company and its asset custodian institutions shall open separate securities
ac
counts, funds accounts and other relevant accounts for the collective asset
management plan. The name of a securities account shall indicate the name of the
securities company, the title of the collective asset management plan and other contents.




Ar
ticle 48 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
investm
ent 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 49 An asset custodian institution shall have a spe
cial 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 5
0 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 investmen
t 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 comp
any 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 comp
any 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 51 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 52 Where, due to expiry of the term of investment manageme
nt 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 contrac
t, 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 collectiv
e 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 r
elevant accounts.




Chapter V Regulatory Measures and Legal Liabilities




Article 53 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 ma
nagement 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 e
xist in the internal
control of the company; or


(3) any other circumstance as provided for by the CSRC.




Article 54 A securities company shall formulate an internal inspection system for the
operation of the customer asset management business, and co
nduct 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 compa
ny and the local CSRC office in the place where an
asset management branch is located.




Article 55 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 56 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 sha
ll 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 57 A securities company or an asset custodian institution shall preserve the
accounting books on the customer asset management business in accordance with the
provision
s of relevant laws and administrative regulations, and appropriately preserve
relevant contracts, agreements, trading records and other documents and materials.




Article 58 The CSRC and its local CSRC offices shall conduct, on a regular or
irregular b
asis, inspections on the implementation of the customer asset management
business by securities companies and asset custodian institutions, and the securities
companies and asset custodian institutions shall provide assistance.


Where any senior manager, d
irectly responsible person
-
in
-
charge or any other directly
liable personnel of a securities company or an asset custodian institution violates the
provisions of these Measures, the CSRC and its local offices shall, in light of different
circumstances, take

administrative regulatory measures against him, such as holding a
regulatory conversation, ordering suspension of the duties and powers of the person,
determining him as a person not suitable for the post and so forth.




Article 59 Where a securities

company, an asset custodian institution or its directly
responsible person
-
in
-
charge or any other directly liable personnel violates the provisions
of these Measures to engage in the customer asset management business, the CSRC
shall impose administrative

penalties in accordance with these Measures. If it is otherwise
provided by any law or administrative regulation, the relevant provisions shall apply. If the
circumstance is severe and any crime is suspected to be involved, the case shall be
transferred t
o the judicial organ in accordance with law, and the violator shall be subject to
criminal liabilities.


Where a securities company, an asset custodian institution or any of its directly
responsible person
-
in
-
charge or any other directly liable personnel i
mpairs a customer's
lawful benefits when engaging in the customer asset management business, it/he shall
assume civil liabilities in accordance with law.




Article 60 Where a securities company violates the provisions of these Measures by
conducting th
e customer asset management business without authorization, it shall be
ordered to make a correction, and be admonished or fined. The directly responsible
person
-
in
-
charge and other directly liable personnel shall be admonished or fined, and his
qualificat
ion for being a senior manager or his securities practicing qualification shall be
revoked in accordance with the law.




Article 61 Where a securities company is subject to any of the following
circumstances when it engages in the customer asset manage
ment business, it shall
make a correction on its own initiative; if it fails to make a correction, it shall be ordered to
make a correction; if it refuses to make a correction, its customer asset management
business shall be suspended, and it shall be admo
nished and/or fined; if the circumstance
is severe, its qualification for the customer asset management business shall be canceled
in accordance with the law:


(1) where it fails to handle the custody of customer assets in accordance with the
provisions of

these Measures;


(2) where it fails to place the relevant materials at the business place in accordance with
the provisions of these Measures;


(3) where it violates the provisions of Article 28 of these Measures by entrusting other
institution or individ
ual to popularize the collective asset management plan on its behalf;


(4) where it violates the provisions of Article 29 of these Measures by using a customer's
participation funds without completing the establishment of the collective asset
management pl
an;


(5) where it violates the provisions of Article 30 of these Measures by refusing to conduct
trading through special trading booths;


(6) where it violates the provisions of Article 14 and Article 31 of these Measures by
making investment out of the in
vestment scope or proportion;


(7) where it violates the provisions of Article 32 of these Measures by engaging in
associated trading without following the provided procedures or in excess of prescribed
proportion;


(8) where it fails to perform the obliga
tion of notifying or reporting in accordance with the
provisions of Article 34 of these Measures;


(9) where it engages in the acts forbidden to be done in accordance with the provisions of
Article 36 and Article 37 of these Measures;


(10) where it violat
es the provisions of Article 41 of these Measures by concluding an
asset management contract with a customer;


(11) where it fails to perform the appropriate sale obligations in accordance with the
provisions of Article 40 and Article 42 of these Measures;


(12) where it fails to establish a fair trading system and a abnormal trading daily
monitoring system, and fails to fairly treat the varied assets under its management;


(13) where it fails to preserve the relevant materials in accordance with the provis
ions of
Article 57 of these Measures;


(14) where it fails to assist in the supervision and inspection of the CSRC and its local
CSRC offices in accordance with the provisions of Article 58 of these Measures; or


(15) other acts in violation of the provisi
ons of these Measures.


The directly responsible person
-
in
-
charge or other directly liable personnel in the
securities company shall be admonished and/or fined; if the circumstance is severe, his
qualification for being a senior manager or his securities p
racticing qualification shall be
canceled in accordance with law.




Article 62 Where an asset custodian institution engaging in customer asset
management business is subject to any of the following circumstances, it shall be ordered
to make a correctio
n, and be admonished and/or fined:


(1) where it fails to manage the assets in the asset management business or to perform
custody duties in accordance with the provisions of Article 49 and Article 54;


(2) where it fails to preserve the relevant materials

in accordance with the provisions of
Article 57; or


(3) where it fails to assist in the supervision and inspection of the CSRC and its local
CSRC offices in accordance with the provisions of Article 58 of these Measures.


The directly responsible person
-
in
-
charge or other directly liable personnel in the
securities company shall be admonished and/or fined; if the circumstance is severe, his
qualification for being a senior manager or his securities practicing qualification shall be
canceled in accordance
with law.




Article 63 Where any other popularization institution violates the provisions of Article
40 and Article 42 of these Measures by popularizing an asset management plan, it shall
be ordered to make a correction, and shall be admonished or fine
d. The directly
responsible person
-
in
-
charge or other directly liable personnel in the securities company
shall be admonished and/or fined; if the circumstance is severe, his securities practicing
qualification shall be canceled in accordance with law.





Article 64 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 o
f 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, a
nd handle the matters
regarding the termination of the contract in accordance with the provisions of Article 52 of
these Measures.




Chapter VI Supplementary Provisions




Article 65 The meaning of “affiliated parties to” shall be the same as that a
s
mentioned in the Accounting Standards for Enterprises No.36


Disclosure of Affiliated
Parties.




Article 66 Other institutions approved by the CSRC to engage in the customer asset
management business shall abide by and implement these Measures.





Article 67 These Measures shall come into force on the date of issuance. The Pilot
Measures for the Customer Asset Management Business of Securities Companies (Order
No. 17 of the CSRC) issued by the CSRC on December 18, 2003 shall be repealed
simultan
eously.