Back-office Outsourcing Research Of China Mutual Fund

China mutual fund has experienced the extremely rapid developmentsince1998, when the first fund product was issued. Until the end of2011, there were total68fund management companies in China, the fundassets under management reached$394.6billion, and over1100fundproducts were released. However, the business performance of Chinafund management companies encountered a big hit because of theFinancial Crisis in2007. The capital market gradually got recoveredbecause of the favorable policy of Chinese Government, but the total64fund management companies still have to face the loss of123.5billionRMB in2011. Fund managers and regulators started to consider how toput the limited resources to the most critical business part–investmentmanagement, so as to directly improve the fund operation performanceand create profit.In current market environment, there is the possibility and necessityto develop the business process outsourcing for the back office businessof the fund industry. The11thchapter in amendments draft of“Securities Investment Fund Law2011” specifies that fund managers andfund custodians can assign service agencies to handle the fund business operation of accounting and valuation. This means the regulators allowfund management companies to outsource their back office business, suchas accounting, valuation and settlement. This effort could reduce theoperation cost and risk, as well as increase the efficiency during theprocess of product innovation and investment internationalization.Because of the diversity and maturity of mutual fund market in US,the US investment management outsourcing service is in the leadingposition. Fund accounting, valuation and settlement is one of the coreparts of the back office business. By studying the US mutual fundmodel, we found that there is difference of accounting and valuationrequirements between china and US, and the lack of back-officeoutsourcing regulations in China fund industry will lead to the waste ofexisting system and resources, or even financial information securityproblems. It is harmful to the long-term development of China fundindustry.Base on the analysis of status and problems of back office operationof China fund industry, and the enlightenment of the US model, we founda specific “three-step” back office outsourcing mode for China fundindustry. Starting from outsourcing fund accounting, valuation andsettlement of QDII business, eventually expand to outsourcing the wholeback office of fund industry. During the development of back officeoutsourcing, we need to constantly improve the operation mode and regulatory environment, ultimately realize the innovation anddevelopment of this new market!...