Research On The Efficiency Of Entrusting Financial Contract

The entrusting financial contract is a contract made by both the client and the trustee. The client entrusts his or her financial assets, such as funds and securities to the trustee. And then the trustee will use his or her expertise to invest them in the financial world like securities and futures and pay the client a certain proportion of benefits. But in recent years, due to the instability of financial markets and the downturn of the stock market in our country, many disputes of the entrusting financial contract resurface. Furthermore, there is a great controversy in the judicial practice because of the lack of clear laws and regulations. The entrusting financial contract is an innovated method of financial management, which is quite different from the current contracts listed in Contract Law. It should be studied as a new relationship by listing individual cases. In terms of subject qualifications, according to the principle of autonomy of private law, the trustee can be generally qualified without obtaining the qualification of entrusted investment management authorized by CSRC. The minimum clause is the core of trust management as well as the root of all kinds of disputes. It specifies the client will get fixed principal and benefits. To admit the validity of minimum clauses is not only the result of respecting laws, but also the necessary demand of following the economic law, realizing the unity of power and responsibility and maintaining the normal financial order. When the bad management of entrusted assets leads to the loss, the trustee should bear it according to the agreement.