（Address of Zhou Ming, Secretary of the Party Committee and General Manager of the CSDC, at 2013 Annual Meeting of Chinese Securities Investment Fund Industry）

      Chinese asset management industry will enter a new development era as the amended Securities Investment Fund Law of the People’s Republic of China (the “new fund law”) takes effect as of June 1. The Annual Meeting of Chinese Securities Investment Fund Industry is of great significance at this turning point of the industry. I would like to, on behalf of China Securities Depository and Clearing Corporation Limited (CSDC), take this opportunity to talk about several points of view on the development of the asset management industry. 
      1. Implementation of the new fund law will propel quick development of the asset management industry.
      Deepening the reform of financial system and accelerating the construction of a multi-level capital market is a key strategic decision and plan made by the CPC Central Committee and the State Council, and an important approach to accelerating transformation of the economic development mode and adjustment of the economic structure, finishing building a moderately prosperous society in all respects, and achieving the great rejuvenation of the Chinese nation. Accelerating the development of the asset management industry is an important aspect of speeding up the reform and development of the capital market. The new fund law was promulgated at a time when legal system had to be adjusted to keep in step with the times, and its implementation will have great significance and far-reaching implications.
      As part of the effort to propel the reform and development, the new fund law aims to drive the development of the capital market through construction of the legal system. It lays a system foundation and makes a top-down design for future development of the asset management industry, and ushers the industry into a new development era full of vitality and competitiveness.
      As the largest emerging market and one of the most dynamic economies in the world, China has a broad economic prospect, which provides a great development potential for the asset management industry. On the one hand, after the accomplishment of the goal of completing the building of a moderately prosperous society in all respects and doubling its 2010 GDP and per capita income for both urban and rural residents by 2020, the demand of the public for asset management will increase remarkably. On the other hand, to attain the goal of doubling the per-capita income for residents, it is imperative that the asset management industry should be developed to enable residents to preserve or increase the value of their assets, and to receive more income from investment.
      After the new fund law comes into effect, more and more asset management products and services will be available, the development quality of the asset management industry will be constantly improved, the core competence of the industry will gradually come into being, and the industry will have a brilliant future.
      2. Sound backend infrastructure is required for healthy development of the asset management industry.
      The backend construction needs to be strengthened to fully implement the new fund law, align with the development requirements of the asset management industry in the new era, support healthy development of the industry, and prevent systematic risks.
      A centralized and unified backend is essential for healthy development of the asset management industry. Based on proven experience of other financial markets and overseas markets, the centralized and unified backend infrastructure will become imperative when the market has developed to a certain scale or stage. This helps improve the overall efficiency, reduce the total cost, and ensure the overall security. In respect of the stock exchange market, all major securities markets in the world, including those in China, have implemented centralized deposit and settlement of securities. In respect of the asset management industry, the Depository Trust &Clearing Corporationof the U.S. had set up a centralized and unified backend processing platform for mutual funds in 1986, which paved the way for over 20 years of prosperity of the mutual fund market in the U.S. After the global financial crisis in 2008, western developed countries and international financial supervision organizations reached an important consensus, that is, OTC financial products should also be registered and settled in a centralized manner whenever possible to improve the market transparency and proactively identify, warn, and remove systematic risks. We shall draw experience from international development trends and lessons while propelling the healthy development of the asset management industry in China.
      The implementation of the new fund law extends the business scope of fund companies, increases investment targets, and accelerates the transformation of fund companies into modernized asset management firms. Centralized and unified backend infrastructure facilitates the interconnection between the asset management market and other financial markets or even overseas markets, and expands the market space of the asset management industry. As a result, it promotes the cross-market product development and innovation, and improves the service level of the asset management industry for the real economy.
      After the new fund law comes into effect, a fully open market will witness a remarkable increase in market players and an explosion of interactive businesses between these players. In this case, the centralized and unified backend infrastructure facilitates unification of standards, enhances information exchange, and improves the overall operational efficiency of the industry. In addition, it gives full play to the economy of scale, reduces operating cost of the markets, improves the environment and promotes the sustainable development of the industry.
      After the new fund law comes into effect, the risk with any market player or business sector may lead to a systematic risk as the business innovation becomes more complex and business relationship between market players becomes closer. This poses a new challenge to prevention of systematic risks. The centralized and unified backend infrastructure enables users to clearly identify risk information of the industry, understand and manage risks, and prevent chain reaction and formation of a systematic risk. In addition, this helps users perform effective control and external supervision over key business sectors which are vulnerable to systematic risks.
      After the new fund law comes into effect, on the one hand, we have to relax control to encourage development and promote innovations. On the other hand, we have to ensure the effectiveness of the supervision and normal development of the asset management industry. The centralized and unified backend infrastructure helps the regulatory body obtain accurate key data for decision making, gain a panoramic view of the industry, and improve the efficiency of regulation. It also helps strengthen the protection of the investors’ rights and interests, maintain the principle of “openness, fairness and justice” on the capital market, and build up the investors’ confidence in the industry.
      3. The CSDC will strengthen construction of the backend for healthy development of the asset management industry.
      As the backend and one of the most important infrastructure for the capital market in China, the CSDC shoulders the important mission and responsibility of accelerating the construction of a multi-level capital market.
      In recent years, the CSDC have completed many projects to support healthy development of the asset management industry, which include: (1) Build a centralized data exchange platform to enable unified sales processing and centralized TA data backup for the fund industry in China; (2) Take the lead in formulating industrial standards to promote normalized development of the industry; (3) Give vigorous support to the Shanghai Stock Exchange and the Shenzhen Stock Exchange in developing fund business, and cooperate fully with fund companies to launch such innovative services as cross-market ETF, cross-border ETF, and real-time subscription and redemption of on-exchange monetary funds; (4) Provide services, as the only registration business outsourcer, for 349 fund products of 53 fund companies, 940 collective asset management plans of 84 securities companies, and 14 bank wealth management products for the Bank of China. (5) Implement unified account, centralized registration and settlement for some asset management products, with a total of 42.91 million investors’ accounts.
      After the new fund law comes into effect, new situations pose new requirements for construction of the backend infrastructure for the asset management industry. To implement the new fund law, the CSDC will carry out the following measures to propel healthy development of the asset management industry:
      (1) To implement the new fund law and strengthen the construction of the backend infrastructure for the asset management industry. The CSDC has made this its focus of the work and development strategy. The CSDC will increase investment in the backend infrastructure to support sustainable development of the asset management industry.
      (2) To harmonize the backend service mechanism and establish a secure and efficient backend service system for the industry. The CSDC will make concrete efforts to centralize the backend to certain extent, that is, to centralize business sectors which share common features and are vulnerable to systematic risks while maintaining distributed processing for highly flexible and individualized businesses. In this way, the economy of scale is achieved while the relevant flexibility and innovation space for the management personnel are also maintained.
      (3) To cooperate in market innovation and industry innovation. The CSDC aims to extend the market space and support the sustainable development of the asset management industry by strengthening the backend construction. It assists Shanghai Stock Exchange and Shenzhen Stock Exchange in developing LOF, fund classification, and pledge-type repo of fund products, and supports interconnection between different platforms to enable the asset management industry to invest in other markets and drive the development and innovation of cross-market products.
      (4) To innovate market-oriented service modes and constantly improve the service level for the asset management industry. In line with development requirements of the asset management industry, the CSDC will actively explore the market-oriented operation mechanism, improve the backend service, and enhance the service capability and service level of the company.
      (5) To strengthen risk control, prevent systematic risks, and propel healthy development of the asset management industry. The CSDC will make great efforts to build an open, transparent, normalized, and efficient backend system and perform centralized monitoring on business sectors vulnerable to systematic risks. Concrete measures will be taken to prevent systematic risks and to guarantee healthy development of the industry.
      In the future, the CSDC will work closely with all of you to implement the new fund law for the development and prosperity of the asset management industry, and for the reform and healthy growth of the capital market in China.