The Research On The Supervision Of Securities Investment Fund Custodians

Behind the rapid development of China’s securities investment funds,there are still a series of problems such as the illegal operation of fund managers and the infringement of investors’ interests.Therefore,the issue of fund trustee supervision is particularly important.Due to the natural disadvantages of investors,the fund custodian has become the spokesperson for the fund holders and should play the supervisory role in investment operations in order to prevent managers from illegal operations and protect the legitimate interests of fund holders.However,custodians lack substantial independence due to the selection and sale relationship between custodians and management institutions.As a result,custodians which should have been supervisors completely become tools for asset settlement and delivery.Coupled with the ambiguity of rights and responsibilities and the lack of compensation incentive system,the fund trustees choose to pay attention to custody but neglect supervision.Based on the reality of China’s fund custodians and combined with the market characteristics of the new stage ofthe fund industry,it is proposed to reform the fund trustee selection system,establish trustee compensation incentive mechanisms and improve professional teams to strengthen the custodian’s independent status.Besides,it is suggested that the legislation should be made to determine the nature of supervision,establish a supervision and accountability mechanism,grant specific supervision rights and refine supervision content.Furthermore,the market entities can be exerted to achieve the fund trustee supervision effect.