.Third-party custody business

Service Description

The fund custody mode in which a securities company deposits the transaction and settlement funds of customers in a designated commercial bank, and opens independent accounts for management in the name of each customer. The commercial bank is responsible for the depositing and withdrawal of the funds, supervising the deposits as a third party, so as to guarantee the safety of funds of customers.

Features

1.        Closed operation of customer capital: In this mode, the securities companies transfer the customers¡¯ deposit and withdrawal of capital function to the custody bank and handle no more business on customers¡¯ deposit and withdrawal of capital. Any deposit and withdrawal of capital will be initiated by the customer through transfer between the bank and the securities companies and the transaction settlement capital withdrawn by the customer can only return to the settlement account of the same bank designated in advance, which enables the custody operation of transaction settlement capital and prevents the risk of embezzlement of the customer¡¯s capital and the risk of money laundering and cashing out.

2.        Check of general account and subsidiary ledger by custody banking: In this mode, the custody bank opens a customer¡¯s management account that maps the balance of capital account in the securities company so as to supervise the customer¡¯s account detail, which will be summarized to check with the customer¡¯s capital general account at the securities company to prevent the embezzlement in the general account by that company to certain extent.

3.        System of customer independent inquiry and account-check: In this mode, the custody bank will provide the customer with independent inquiry of management account, in which the customer can effectively monitor and control the capital of the customer through comparison between the data of the management account at the custody bank and that of the capital account at the securities company with the help of the inquiry mechanism and account-check mechanism provided by the custody bank and the securities company.

4.        All-round supervision and control system of customer capital: In this mode, an comprehensive supervision and control system of the customer capital is established by the Securities Company, custody bank, customer, and supervision and control organization to ensure the safety of the customer capital through reasonable division of business and system arrangement. In such a system, the custody bank shall neither be directly liable to the customer nor directly control the legal person settlement of the securities company. It is only responsible for check of general and subsidiary accounts and provides independent inquiry for customer, thus assisting in control and supervision to some extent.

5.        Multi-bank custody mechanism: This mechanism helps meeting different bank preferences of customers and is of good compatibility. It can well adapt to existing securities products and settlement rules in China and accommodate itself to the development of products and system in future securities market.

Handling Procedure

Procedures for activating the third-party custody business:

1.        Securities Company pre-assignment:

An individual customer shall carry his/her valid identity documents, securities account card, securities transaction card, and Licaitong Card (bankbook) with him/her to the counter of business office of the securities company to open securities capital account, designate pre-assigned custody bank, and sign the Custody Agreement.

The authorized operator of a corporate customer shall carry his/her valid identity documents, securities transaction card, securities account card, business license copy with official seal of the customer and specimen seal, copy of certificate of legal person¡¯s organization code, legal person¡¯s power of attorney, ID card copy of legal representative, and certification of opening a bank deposit account to the counter of business office of the securities company to open securities capital account, designate pre-assigned custody bank, and sign the Custody Agreement.

2.        Custody bank confirmation:

An individual customer shall carry his/her valid identity documents, securities transaction card, securities account card, original and copy of Licaitong Card (bankbook) with the same name, and the Custody Agreement signed by the business office of a securities company with him/her to the counter of CGB outlet to fill out the Application Form.

The authorized operator of a corporate customer shall carry the originals and copies with official seals of his/her valid identity documents, securities transaction card, business license, certificate of legal person¡¯s organization code, legal person¡¯s power of attorney, ID card copy of legal representative, and certificate of opening abank deposit account, as well as the Custody Agreement signed by the business office of a securities company to the counter of CGB¡¯s original outlet for opening that account to fill out the Application Form and stampspecimen seal.

Once a customer has started the third-party custody business, he/she can transact bank-securities transfer, inquiry of account, and change of information through CGB¡¯s counter and the channel of Securities Company. For detailed business flow, refer to CGB counter and business office of securities company.

Service Channels

CGB¡¯s more than 500 outlets throughout China

Tips

1.        In case of loss of bank account password, please report the loss in time. Valid identity documents are required for reporting the loss, including ID card, passport, household registration book, certificate of officers, police badge, certificate of solder, home re-entry permit, or interim ID card.

2.        The acceptance period for third-party custody business is generally between 8:30 am and 16:00 pm, to be subject to the requirements of the securities companies in partnership.

3.        An individual customer can transact the third-party custody business at all CGB outlets that handle such business. Transaction of such business on an agency basis is currently not available for individual customers in CGB. A corporate customer shall transact such business at the outlet at which it opens a settlement account.