Name: Guiding Opinion on the Fair Trading System of Securities Investment Fund Management Companies (《证券投资基金管理公司公平交易制度指导意见》, the “Guiding Opinion”)
Issuing authority: China Securities Regulatory Commission (“CSRC”)
Effective date: 20 March 2008
Subject: Fair trading system of fund management companies
Following the issuance of the Securities Investment Fund Law of the PRC in 2003 and the Administrative Rules on Securities Investment Fund Management Companies in 2004, the CSRC has issued the Guiding Opinion to further regulate fund management companies in fair trading.
Highlights
- The Guiding Opinion expressly prohibits direct benefit transfers and such transfers arranged through transactions with third parties between different investment portfolios, which include closed-end funds, open-end funds, social security funds, pension funds and specific client assets management.
- The scope of the fair trading system has been expanded to apply to all investment products and investment management activities including primary market subscription and secondary market trading as well as activities relating to such investment management activities such as authorisation, research and analysis, investment decisions, trading execution and performance evaluation.
- The Guiding Opinion prescribes various reporting and information disclosure requirements under which a fund management company is required to analyse its investment portfolios on a periodical basis, amongst other things. For example, where the difference between the performance of different investment portfolios with similar investment styles is greater than 5%, the fund management company is required to provide a specific explanation in its annual report regarding such difference.
- The Guiding Opinion emphasises the internal control for investment decisions. In particular, specific provisions are set out in respect of research methods, investment authorisation, transaction execution and evaluation, among others.
