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The healthy operation of the asset management market requires financial institutions in different aspects of asset management to cooperate with each other on the basis of contracts under the regulatory framework formulated by the regulatory authorities to build an asset management business ecosystem with clear division of labor and clear rights and responsibilities. Especially in the current deleveraging process, when dealing with local and individual risk events, cooperation between different business links is more important to prevent the spread of risks caused by unclear responsibilities of different institutions. In this process, the custodian institution plays a very important role.
I. Responsibility Orientation of Custodian in Asset Management Business Chain
Under the current regulatory framework, the responsibilities of China's custodian institutions are mainly asset custody, fund settlement, accounting and valuation, investment operation supervision, information disclosure, establishment of independent accounts, data storage and other matters stipulated in the contract. The definition of these responsibilities comes from the relevant laws and regulations of different regulatory departments.
At present, the custody of private equity funds is governed by the Interim Measures for the Supervision and Administration of Private Equity Funds [OrderNo. 105 of the CSRC] and the Guidelines for the Custody of Commercial Banks (China Banking Association, August 20 13), in which the responsibilities of the custodian include information disclosure and data storage.
Article 24 of the Measures for the Supervision and Administration of Private Equity Funds stipulates that private equity fund managers and private equity fund custodians shall truthfully disclose the fund investment, assets and liabilities, investment income distribution, expenses and performance awards undertaken by the fund, possible conflicts of interest and other important information that may affect the legitimate rights and interests of investors in accordance with the contract; Article 26 stipulates that private fund managers, private fund custodians and private fund sales institutions shall properly keep records of private fund investment decisions, transactions and investor suitability management and other relevant materials.
Second, how does the custodian cooperate with institutions in different business sectors?
(1) Cooperation between the custodian institution and the private equity fund service institution
According to the Measures for the Administration of Private Equity Fund Services (Trial) issued by China Asset Management Association on March 20 17, fund services and fund custody should be separated, that is, the custodian of private equity fund should not be entrusted as the service organization of the same private equity fund. At the same time, private equity fund service agencies have the responsibility to register fund shares and keep the list of investors, and the service agencies should provide the list of investors to the custodian.
Article 2 of the Measures for the Administration of Private Investment Fund Services (Trial) stipulates that these Measures shall apply to private fund managers who entrust private fund service institutions to provide services such as fund raising, investment consultancy, share registration, valuation accounting and information technology systems for private funds; Article 20 stipulates that the basic duties of institutions engaged in private equity fund share registration services include: setting up and managing investors' fund accounts, being responsible for fund share registration and fund settlement, confirming fund transactions, distributing dividends as agents, keeping the list of investors, and other duties stipulated by laws, regulations or service agreements.
Article 16 of the Measures for the Administration of Private Equity Fund Services (Trial) stipulates that a private equity fund custodian shall not be entrusted as the service organization of the same private equity fund, except that the custodian may separate its custody function from the fund service function, properly identify, manage and monitor potential conflicts of interest, and disclose them to investors.
Article 25 of the Measures for the Administration of Private Investment Fund Services (Trial) stipulates that the fund share registration institution shall handle the initial registration or change registration of the investor roster. The fund share registration institution shall provide a list of investors to the private equity fund custodian,
(2) Cooperation between the custodian institution and the private equity fund supervision institution
According to Article 21 of the Guidelines for Internal Control of Private Investment Fund Managers issued by China Asset Management Association on February 20 16 and Article 22 of the Measures for the Administration of Private Investment Fund Services (for Trial Implementation), the relevant responsibilities of "preserving the fund property" shall be borne by the fund manager or the fund supervision institution. According to the definition of relevant laws and regulations, regulatory agencies mainly refer to China Securities Depository and Clearing Co., Ltd., commercial banks, securities companies, publicly offered fund management companies and other institutions as stipulated by fund industry associations. According to the current regulations of the regulatory authorities, commercial banks cannot sell private equity funds without permission. There is no legal basis for the custodian to exercise property rights on behalf of private equity funds and preserve fund property.
Article 21 of the Guidelines for Internal Control of Private Equity Fund Managers stipulates that unless otherwise agreed in the fund contract, private equity funds shall be managed by fund custodians, and private equity fund managers shall establish and improve the selection and appointment system of private equity fund custodians to effectively ensure the safety of funds. If the fund contract stipulates not to manage private equity funds, the private equity fund manager shall establish institutional measures and dispute resolution mechanisms to ensure the property safety of private equity funds.
Article 22 of the Measures for the Administration of Private Investment Fund Services (Trial) stipulates that the special account for raising funds and the special account for settlement funds shall be effectively supervised by the regulatory authorities, and the supervision agreement shall specify the joint and several liability clauses of the regulatory authorities to ensure the safety of investors' funds. Regulators refer to China Securities Depository and Clearing Co., Ltd., commercial banks, securities companies, Public Offering of Fund management companies and other institutions that have obtained the qualification of fund sales business as stipulated by fund industry associations.
(3) checks and balances and cooperation between the custodian institution and the private placement manager
Custodian's contractual responsibilities such as asset custody, fund settlement, accounting and valuation, investment operation supervision, information disclosure, independent accounting and data storage are not only professional services for private fund managers, but also form certain checks and balances. In order to ensure the smooth play of this check and balance function, there should be a clear division of responsibilities between the custodian and the fund manager. For example, if the actual controller of the private equity manager "loses contact", it is not appropriate to extend the takeover responsibility beyond the scope of the contract to the custodian institution, because this is not only contrary to the policy orientation that the entire new asset management regulations have been committed to breaking the rigid redemption and soft constraints of the asset management industry, but also easily leads to moral hazard of private equity fund managers. In this case, the more reasonable way should be to organize the original fund manager team to continue to perform the manager's duties as soon as possible, and find a suitable private placement manager to replace the original manager; At the same time, when necessary, the regulatory authorities and local governments will take the lead in organizing the establishment of a liquidation group to do a good job in asset preservation and liquidation distribution.