Core Viewpoint - The ongoing adjustments in the queue for fund custody license applications are primarily due to the increased entry barriers set by new regulations, leading to a significant reduction in the number of institutions applying for such licenses [6][7]. Group 1: Current Status of Fund Custody License Applications - As of now, only two institutions remain in the queue for fund custody qualifications: Mongolian Merchant Bank and Dongwu Securities, with their application dates being January 28, 2021, and October 17, 2022, respectively [3]. - Guangzhou Bank, which had over 900 billion in assets, has withdrawn its application, marking the sixth institution to do so this year [3][4]. - Chengdu Rural Commercial Bank also withdrew its application earlier this year, having joined the queue in December 2022 [3]. Group 2: Impact of New Regulations - The new regulations released by the China Securities Regulatory Commission (CSRC) in April 2023 have raised the net asset requirements for institutions applying for fund custody licenses, with commercial banks now needing a minimum of 500 million and securities companies 300 million [7][8]. - The requirement for institutions to have a regulatory rating of at least level 2 for banks or A for securities companies over the past three years has also contributed to the withdrawal of several applicants [7][8]. - The new rules emphasize the need for substantial operational capabilities and sustainable business models, further narrowing the pool of eligible applicants [7][8]. Group 3: Concentration of Fund Custody Market - The fund custody market is becoming increasingly concentrated among larger institutions, with a significant portion of the market share held by a few major banks and securities companies [10][11]. - The new regulations have created a challenging environment for smaller banks and securities firms, as they struggle to meet the heightened requirements and compete with larger entities [10][11]. - The CSRC has noted that a majority of fund custody licenses are held by a small number of institutions, indicating a need for stricter entry criteria to ensure that only capable firms can operate in this space [11].

Core Viewpoint - The number of brokerages applying for fund custody licenses has significantly decreased from seven to one due to heightened regulatory entry requirements, leading to a "withdrawal wave" among institutions that could not meet the new standards [2][6][9]. Group 1: Regulatory Changes - The China Securities Regulatory Commission (CSRC) has raised the entry thresholds for fund custody qualifications, requiring commercial banks to have a net asset of at least 500 billion and securities companies to have at least 300 billion [9][10]. - The new regulations also stipulate that institutions must have a regulatory rating of level 2 or A class or above for the past three years and demonstrate substantial operational capabilities [10]. Group 2: Withdrawal of Applications - As of August 15, only Dongwu Securities remains in the queue for fund custody qualifications, while six other brokerages have withdrawn their applications due to inability to meet the new requirements [2][4][6]. - The withdrawal trend began in July when several institutions received regulatory guidance to retract their applications [2][6]. Group 3: Current Landscape - Currently, there are 68 institutions with fund custody qualifications, including 36 banks and 30 brokerages, indicating a concentration of custody business among larger institutions [7][12]. - The new regulations have led to a situation where the majority of small and medium-sized brokerages lack fund custody licenses, further consolidating the market among larger players [12].

Core Viewpoint - The China Securities Regulatory Commission (CSRC) plans to revise the "Securities Investment Fund Custody Business Management Measures" to enhance the responsibilities of custodians and protect investor interests, aiming to improve the regulatory framework and promote healthy market development [1][2]. Group 1: Revision of Custodian Entry Requirements - The revision will tighten entry requirements for custodians, focusing on substantial operational capabilities and compliance risk control, with a minimum net asset requirement of 50 billion yuan for commercial banks and 30 billion yuan for securities firms [3][6]. - The revised measures will increase the total number of chapters from six to seven and the number of articles from 43 to 61, with 25 articles being revised and 18 new articles added [2][3]. Group 2: Addressing Custodian Responsibilities - The CSRC aims to address issues where some custodians are "custodians without management" or "unable to manage," highlighting the need for enhanced due diligence, investment supervision, and information disclosure [5][6]. - Specific measures include strengthening the verification of information provided by fund managers, enhancing client and product entry requirements, and clarifying the responsibilities of custodians in risk disclosure and reporting [5][6]. Group 3: Improvement of Exit Mechanisms - The revised measures will establish a more orderly market mechanism for exiting custodians, detailing conditions for license cancellation and ensuring a smooth transition for custodians who no longer meet entry requirements [6]. - The revision will also allow leading custodians to establish wholly-owned subsidiaries dedicated to custody services, reinforcing the responsibilities of parent companies [6].